Toyota Motor is planning a new car assembly plant in Japan, according to a local media report.

Unnamed sources told Kyodo News the new factory would help the automaker keep up with strong global demand and create surplus capacity to allow replacement of old production lines at some existing domestic plants.

The report said Toyota is eyeing Hokkaido or the Tohoku region as a possible location for the JPY100bn plant which would have capacity of 100,000 to 200,000 vehicles a year.

The plant site would be decided by the end of 2007, Kyodo News was told.

A Toyota spokesman told the news agency the company was ''always studying what the optimal production system should be, but currently has no specific plan'' to alter output.

Industry analysts were quoted as saying a new assembly plant would boost local economies in northern parts of Japan that have lagged behind in the current recovery cycle in the country.