It has been reported today that Ford Motor Co. will begin making compact cars at a Mazda Motor Corp. factory in Japan as early as 2002.

Ford and Mazda have reached a basic agreement to annually build 40,000-to-50,000 Ford Focus compacts, as well as a 1-liter subcompact, at a factory in Hiroshima.

Ford and Mazda officials would neither confirm nor deny the report.

U.S. and European automakers have not made cars in Japan since Nissan Motor Co. manufactured Volkswagen AG's Santana between 1984 and 1990

Mazda are planning to begin building the Ford Escape compact sport-utility vehicle late this year in Japan alongside a similar Mazda version, with which it shares engine, transmission and other components.

Mazda currently supplies Ford with four Mazda-designed vehicles, including a version of its popular 1.3-liter Demio wagon. Ford then sells it in Japan as the Festiva Mini Wagon.

Dearborn, Michigan-based Ford owns a controlling 33.4 percent stake in Mazda. Mazda's president and about a quarter of its board of directors come from Ford.

Mazda has its headquarters in Hiroshima, about 434 miles southwest of Tokyo.