All of Japan's top five car makers expanded their global output in the first half of 2003, according to data published on Monday, with most of the rise occurring abroad as they continue to make more cars where they are sold, Reuters reported.

With demand stalling at home, Japanese car makers have been enjoying most of their sales rise abroad, leading many to boost output capacity by adding more lines or building new factories, the news agency added.

According to Reuters, that trend is set to continue, with industry leader Toyota planning to boost North American output capacity by more than 30% by 2006 with the start of a vehicle plant in Texas that year.

Second-ranked Honda is also due to double capacity at its light-trucks plant in Alabama by mid-2004, Reuters added.

The flip side of that has been a comparatively weak rise or even a fall in output at home, boding ill for Japan's fragile economy, where exports have been a rare bright spot in recent years, Reuters said.

The exception to the rule was Nissan where output expansion was greater at home, at 11%, compared with a 3.1% rise in overseas output, Reuters said, adding that, globally, Nissan output grew 6.8% during the period.

Reuters said the growth in domestic production at Nissan, Japan's third-largest car maker measured by global sales, has been supported by brisk demand for its new models such as the Teana sedan, the revamped Cube minicar and Fairlady Z/350Z sports car, as well as strong exports of its Infiniti models to the US.

But in general, Reuters noted, domestic production is expected to fall even at car makers that are enjoying sales growth at home - Toyota, for example, has forecast a 1% fall in domestic output this year, even though it expects sales to rise by 3%.

"It's a safe assumption that, looking at the medium term, prospects for a growth in domestic production are minimal," Kurt Sanger, auto analyst at ING, told Reuters.

Adding insult to injury, Reuters noted, top car makers are building more cars overseas to sell in Japan to make more efficient use of their global production centres.

Toyota recently unveiled the British-built Avensis for the home market, to join the US-made Voltz [Matrix] sports wagon among the growing number of foreign-made cars sold in Japan.

For the January to June period, Toyota's domestic production grew 3.1%, but overseas output grew by a much faster 15% and global output was up 7.6%, Reuters said.

Mazda, the smallest of the five, marked a 9.1% growth in global output thanks to contributions from the Atenza/Mazda6, Premacy minivan and RX-8 sports car and output jumped 48% overseas, while increasing 1.2% at home, the report added.

Analysts told Reuters some of the holes in domestic production should be filled by new demand from emerging markets in Asia and Africa, slowing the pace of output decline.

Reuters said that Honda cut domestic production by 15% as its ageing model line-up reduced sales by 20%.

But, Reuters added, Honda overseas output surged 21% to 919,575 units, led by a 15% rise in the United States, where sales have been roaring ahead against the market trend, and a 69% surge in Asia, the new frontier for global car makers.

Reuters noted that Honda also imports some cars for the Japanese market, including the Fit Aria compact [sedan] built in Thailand.

Reuters said that fourth-biggest Mitsubishi Motors also built fewer cars in Japan this year - despite a strong rise in domestic sales - as it sold a big chunk of its cars out of its stockpile.