General Motors is to give up its stake in the New United Motor Manufacturing Incorporated (NUMMI) joint venture with Toyota in Fremont, California, the automaker said in a statement. In a separate statement, Toyota said it regretted GM's decision and would consider options for the plant. A Japanese report said a shutdown could not be ruled out, though that option was being viewed cautiously.

Auto industry observers have suggested GM's recent decision to axe the Pontiac Vibe - a variant of Toyota's Matrix that is built alongside the firm's Corolla sedan and Tacoma light truck at NUMMI - by the end of August has doomed the plant, opened in 1984. Toyota, surprisingly, makes the all but identical Matrix in one of its two Canadian factories. It also builds some Corollas and Tacomas elsewhere.

"As part of its long-term viability plan, General Motors has decided that its ownership stake in the will not be a part of the 'New GM'," GM said in the statement.

"After extensive analysis, GM and Toyota could not reach an agreement on a future product plan that made sense for all parties."

"Accordingly, NUMMI will end production of vehicles for GM in August, and there are no future GM vehicles planned for the joint venture at this time.

"Given that, GM believes it is in the best interest of the 'New GM' and its stakeholders that we place our ownership interest in NUMMI in 'Old GM'.

"We have enjoyed a very positive and beneficial partnership with Toyota for the past 25 years, and we remain open to future opportunities of mutual interest."

"Toyota Motor is sorry that General Motors has chosen to withdraw from the Nummi joint venture, ending a long, successful partnership spanning 25 years," the Japanese automaker's statement said.

"While we respect this decision by GM, the economic and business environment surrounding Toyota is also extremely severe, and so this decision by GM makes the situation even more difficult for Toyota. We will consider alternatives by taking into account various factors," it added.

Like many other US auto plants, NUMMI has not been operating at full capacity for some time.

Last month, United Auto Workers (UAW) members at what is Toyota's only unionised plant in North America approved a proposal requiring them to take Fridays off without pay until 7 August.

The furlough was part of a work-sharing programme Toyota earlier decided to implement at some North American factories to protect jobs amid production cuts due to dwindling sales.

Both GM and Toyota have excess production capacity, and NUMMI is Toyota's most expensive manufacturing facility in North America, the Detroit News reported.

The paper noted that Toyota had never closed an assembly plant in North America and that the company's top manufacturing executive said last week that the automaker had no plans to close plants even though it is now losing money.

Nonetheless, Toyota executives in Japan did not rule out closure: ''A shutdown is an option,'' a senior official told Kyodo News. Toyota would reach a decision in July before Vibe production stops, the Japanese news agency reported.

If Toyota decides to continue with the plant, it would acquire all shares of the joint venture owned by GM.

Sources "close to the matter" told Kyodo the automaker would be reluctant to go out of its way to continue operations as it combats excess supply capacity and heavy losses on the back of a shrinking market. But executives at Toyota, which has never closed a plant either in Japan or overseas, were also cautious about pursuing the option since the company had worked to protect employment in order to avoid frictions with the United States, the sources said. Toyota was expected to reach a decision after weighing both the concerns of the local community and economic rationality.

NUMMI had been a key part of Toyota's entry into the US market and a passing point in the career paths of the company's chief executives including new president Akio Toyoda.