Mazda to announce new Mexico car plant Friday - source

TOKYO, June 16 Thu Jun 16, 2011 9:29am EDT

TOKYO, June 16 (Reuters) - Mazda Motor Corp is set to announce on Friday plans for a new factory in the central Mexican state of Guanajuato, a source familiar with the matter said.

The factory will be the fourth overseas assembly site for the Japanese automaker after the United States, China and Thailand -- all joint ventures with former top shareholder, Ford Motor Co .

Construction of the new plant in Mexico is set to begin this fall, with vehicle production to start in the second half of 2013, the source said on condition of anonymity because the information is not yet public.

Mazda plans to build compact cars, initially for sale in Mexico and South America, and eventually export to North America, the source said.

The investment is likely to be in the hundreds of millions of dollars, to be shared with trading company Sumitomo Corp , a second source said. The factory will have initial capacity to build at least 50,000 cars a year.

Mazda is set to make the announcement along with its financial forecasts for the business year to March 2012, due at 3 p.m. (0600 GMT) on Friday, the first source said.

Japanese automakers are under pressure to reduce exports as a strong yen makes it difficult to make money on exports, especially for smaller, lower-margin cars.

Mazda is especially vulnerable, producing more than two-thirds of its 1.277 million vehicles in Japan in the business year that ended in March. It shipped more than 80 percent of Japan-made cars overseas.

Mazda has said it was considering building a new assembly plant in an emerging market to meet growing demand but has not specified where. Last year, it posted record sales and market share in Mexico, which has attracted a growing number of investment deals from Japan, and the auto industry.

Mexico is now the ninth-biggest vehicle producer in the world, with a record 2.261 million vehicles produced in 2010, up 50 percent from 2009, according to the Mexican Automotive Industry Association.

Mexico's auto sector, a key driver of industrial activity, is closely tied to demand from the United States and it has helped the domestic economy rebound from a deep recession. (Reporting by Chang-Ran Kim; Editing by Chris Gallagher)