The announcement comes as the Argentine auto industry saw a more than 20% drop in production in the first quarter compared to the record performance in the same period in a year earlier.
The new unit will be installed in the GM complex in Rosario, an agro-industrial port city some 190 miles northwest of the capital, according to the office of President Cristina Kirchner.
The complex currently employs some 2,800 people and produces seven models.
Production at the new factory is to start in 2017 and aims to reach 140,000 motors a year.
General Motors suspended production in Argentina in 1978, but returned in 1997. It plans another motor factory on Mexico.
Copyright Agence France-Presse, 2014