Advanced manufacturing technology will offset the strong yen, enabling Toyota to continue producing vehicles in Japan, the top executive said.

"Theoretically speaking, (business conditions in Japan) are beyond the limit for a company to continue manufacturing here," president Akio Toyoda told reporters after the launch of the redesigned Vitz [Yaris] line for the domestic market.

According to Dow Jones, Toyoda also said that businesses are hindered by the government's slowness in establishing free trade agreements as well as the yen's strength.

He said the automaker would try to keep production in Japan by upgrading its manufacturing technology, which helps improve vehicle quality.

The report noted that Toyoda's comments followed similar remarks in October when the yen was approaching a 15-year high against the dollar indicating no change in his view that the Japanese auto industry remains under pressure, even as the yen has weakened slightly over recent weeks.

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