Toyota may shift production of all Corolla sedans sold abroad out of Japan as the strong yen continues to squeeze profit margins.

Overseas output of the popular model has been growing although some 70,000 Corollas bound for the US, Europe and Australia are still made in Japan.

The strength of the yen has forced the carmaker to look at localising Corolla production by 2014 and switch export production at its Takaoka plant in Aichi Prefecture to other models – possibly hybrids.

Toyota plans to introduce 21 hybrid models over the next three years and aims to sell around 1.2m worldwide this year.

Honda has already announced plans to shift all production of US-bound Fit [Jazz] compacts from Japan to Mexico in 2014. It will also expand local production of the Fit in Asia [though it is ending UK production in 2014].

Honda recently ended Japanese production of its Civic sedan and stopped making US-bound Accord sedans at its Sayama plant in Saitama Prefecture.