Associated Press says that the Australian subsidiary of Ford Motor Company on Thursday denied a report that it is planning a $A650 million ($US357 million) expansion of engine production.

The denial comes only weeks after arch-rival Holden announced it would build a new V6 engine plant in the state of Victoria.

AP says that the Australian newspaper reported on Thursday that the investment at Ford’s Geelong plant, also in Victoria state, would expand production capacity to 300,000 low emission alloy V6 engines a year.

The report also said that one-third of the plant’s output would power the next generation Falcon, to be launched in 2006 and that about 200,000 engines would be built for export from 2004.

According to AP, The Australian said that Ford Australia was waiting for the expansion plans to be approved by its head office in the United States.

Ford Australia may also seek state government assistance to help fund the investment, the newspaper said. A Victorian government source speaking on condition of anonymity was quoted as saying the government was aware of the proposal, but had not yet been approached by Ford for money.

However, AP says, Ford Australia said on Thursday said the report was false.

”That is entire speculation and there is no basis of truth in it,” Ford spokesman Mike Jarvis told The Associated Press.

The Australian had said that, if Ford goes ahead with the engine proposal, the company would join the Australian arms of carmakers Mitsubishi, GM (Holden) and Toyota in export pushes.