A new 182sqm Chevrolet showroom will be built at the Preston Farm dealership complete with customer lounge, dedicated sales, after-sales and servicing staff.
Sherwoods already sells Chevrolet at its Darlington site on Chesnut Street.
Peter Gibson, Chevrolet salesman at the Darlington branch, will move to the Stockton site to build sales.
Sherwoods became a mini group last May when it acquired the Stockton site on Concorde Way adding to its dealerships in Darlington and Northallerton.
Alasdair MacConachie, Sherwoods managing director, said: "Chevrolet has served the Sherwoods name well over the years and I am confident it will enjoy as much success on Teesside.
"It is a well-proven, well-priced brand that offers reliable and practical motoring and all the benefits of buying new that previously some customers might not have been able to aspire to."