DETROIT (Reuters) - General Motors Co will start a second shift in July with 600 workers at the Lansing, Michigan, plant that will make the new Cadillac ATS sedan, the company said on Tuesday.

The ATS when it launches in late July or August will be the smallest and least expensive Cadillac offering and is a direct challenge to leading sellers among small luxury cars, the 3-Series from BMW and the C-class from Daimler AG's Mercedes-Benz.

In addition to the ATS, existing production of four versions of the Cadillac CTS will continue at the Lansing Grand River plant, which used to also make the phased-out Cadillac STS.

GM said the ATS will begin showing up at U.S. dealers by August. Prices for the compact four-cylinder model will start at $33,990 including destination charges. A turbo-charged engine model will have a base price of $35,795 and a six-cylinder 3.6-liter engine model will start pricing at $42,090.

The new shift was first announced by GM in October 2010.

The new workers will all be so-called entry-level workers on the GM-United Auto Workers union two-tiered pay scale. The new hires will receive hourly pay of nearly $16, compared with about $29 for veteran assembly workers at GM plants.

The second-tier pay is to rise to about $19 per hour over the four years of the labor deal signed between the UAW and GM last fall.

Currently, there are some 835 hourly and 136 hourly workers working one shift at Lansing Grand River. The new hires will mingle with the veteran workers on a single shift and by July the plant will have two shifts with new and veteran workers on each one, GM said.

(Reporting By Bernie Woodall; Editing by Gary Hill)