Export Toyota production at the Tsutsumi plant in central Japan in mid-2009

Export Toyota production at the Tsutsumi plant in central Japan in mid-2009

Toyota chief Akio Toyoda has denied the company is looking to increase production overseas at the expense of its domestic factories as the surging yen makes it more costly to produce vehicles in Japan.

Following a number of speculative reports at the weekend, the company president said although ''logically, it doesn't make sense to manufacture in Japan,'' he would be concerned over the future of the country which largely depends on manufacturing.

He told reporters in Nagoya: ''I know that the present situation for manufacturing is very tough, but our Toyota group places much importance on maintaining production (bases in Japan).''

Japanese manufacturers have stepped up moves to transfer production overseas as the yen has shot up against the dollar and other major currencies and hovered at a 15-and-a-half year high of around JPY81 to the US dollar in Tokyo on Monday.

Toyoda also said he hopes the government will help nurture the automobile business as the pillar of growth for industry and that his company plans to expand its housing business abroad in the future.

At the weekend the Asahi newspaper reported Toyota was considering a second assembly plant in Mexico to counter the effects of the rising yen.

Toyota currently makes pickup trucks mainly for the US market in Mexico. The newspaper said the carmaker plans to produce compact cars for North America at the new factory from around 2013. It did not cite its sources.

The Tokyo Shimbun daily said Toyota is considering halting exports from Japan of the Corolla sedan from around 2013 and shifting that output overseas.

The Corolla is built in 15 countries. In 2009, Toyota made about 235,000 Corollas in Japan - nearly 60% of which were exported - and 815,000 abroad. Toyota is due to start producing the Corolla at its new Mississippi plant from autumn 2011 after the closure of a California factory formerly owned with General Motors.

Tokyo Shimbun also reported that Toyota was also considering shifting production of all Corolla cars sold in Japan to one of its subsidiaries. Toyota currently builds the model at its own Takaoka factory and at two units, Kanto Auto Works and Central Motor Co.

Most Japanese carmakers have vowed not to close any assembly plants in the country but executives have warned that suppliers may be forced to shift production abroad.

Mitsubishi Motors president Osamu Masuko told reporters last week he thought the government did not realise how much damage the strong yen poses to companies.

Nissan said earlier this month it may turn one of its Japanese factories into a new subsidiary, allowing it to broach wage negotiations with labour unions and seek lower prices from suppliers.