Daihatsu Motor plans to build a minivehicle engine plant in Kurume, Fukuoka Prefecture.

The new plant, costing JPY10bn, will have an annual production capacity of about 200,000 units and start operating by August next year, the automaker told Kyodo News on Wednesday.

The plant is being built in the southwestern Japan region because an affiliate there has been constructing a minivehicle assembly plant in Nakatsu, Oita Prefecture, close to Fukuoka, which is expected on stream by the end of this year.

”We have decided on establishment in Kurume where we can secure manpower easily, with an appropriate site being available,” Daihatsu president Teruyuki Minoura told the news agency.

Kyodo noted that Daihatsu’s car plants in Japan have been operating at full capacity as fuel-efficient minivehicles have been selling well due to petrol price rises.

Japanese domestic sales of minivehicles with engines of up to 660cc rose 5.2% to an all-time high of 2,023,619 units in 2006, topping the 2m mark for the first time and setting a record for the third straight year.

In contrast, sales of new motor vehicles of over 660 cc fell to a 29-year low of 3,715,887 units.