The fate of a California plant Toyota ran as a joint-venture with General Motors is hanging in the balance and appears likely to be closed.

GM recently said it would withdraw from New United Motor Manufacturing Inc (known as NUMMI) as it restructured under bankruptcy protection.

"We are looking at the viability of NUMMI. There is a likelihood that we would not buy the rest of NUMMI (from GM,)" new Toyota North America chief Yoshimi Inaba told AFP on Thursday.

Toyota is between a rock and a hard place on this one. The 5,400-worker joint venture dates back to 1984 and is Toyota's only unionised plant in the US. But it is in Fremont, California, a state technically broke, hit hard by unemployment and residential property foreclosures and a key regional market for the automaker, as well as being home to its US sales organisation.

Toyota has a new, empty plant waiting for equipment in Mississippi and surplus capacity elsewhere, all of it non-union.

The United Auto Workers union is negotiating to save the plant, but has not said whether it will offer Toyota the same concessions recently granted to the Detroit Big Three to bring their labour costs into line with those at their Japanese rival.

"There are a number of difficult and complex issues that we need to address before making any final decisions with respect to NUMMI and this process will take more time," Inaba said during a meeting with reporters in Detroit.

Toyota said earlier in a statement it would begin negotiations with Motors Liquidation, the entity that has taken over management of GM assets left in bankruptcy, including the US automaker's stake in NUMMI.

"We are looking at the economic viability of NUMMI as a company," Reuters quoted Inaba as saying. "We would hate to make a painful decision."

But said it was unlikely Toyota would buy the rest of the joint venture at a time when it is struggling with its own problems of excess production capacity.

California is politically powerful and politicians there are currently not rated very highly after the two key parties battled over the state budget in Sacramento forcing Sacramento to issue IOUs to employees and suppliers instead of cheques. A budget deal was only hammered out in the last week after several all-night sessions at the Capitol.

Seventeen members of California's congressional delegation have sent an open letter to Toyota President Akio Toyoda urging him to keep NUMMI open.

"We look forward to hearing from you about this matter, and we look forward to working together on this very important challenge," the letter sent on Thursday said.

GM said earlier it would axe production of the Pontiac Vibe hatchback NUMMI builds in August - the brand itself is also doomed. Oddly, Toyota builds its version of the Vibe - the Matrix - in Canada which leaves just Corollas on the Fremont lines.

"There are a number of difficult and complex issues that we need to address before making any final decisions," Toyota said in its statement. "As a result, this process will take more time."

Inaba said the company had not reached a final decision on what vehicle or vehicles would be produced in Mississippi, either - that facility was originally intended to make the Highlander (Kluger) SUV imported from Japan. It will still be made in the US but in another plant.

Inaba added it could be more than a decade before the automaker would look to build another plant in the US.