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Japan’s Mitsubishi Motors is considering moving production of its mainstay new model to Thailand in a bid to curb costs inflated by the strong yen, according to an AFP report carried by the Sydney Morning Herald.

The company is now developing a new low-priced small car for the global market to replace the current Colt model that is currently produced in Japan and aims to start selling it by early 2012.

“Our Thai plant is the leading candidate production site for this strategic car for the global market,” Mitsubishi spokesman Kai Inada was quoted saying. No formal decision has been made.

“The rationale for this is that we have to consider price competition with other makers, and of course the yen’s recent strength,” he said.

The yen has risen sharply against the dollar in the latter half of this year as investors seek the safe haven currency on concerns over the health of the global economy.

The dollar hit a fresh 15-year low 80.89 yen (NZD$1.31) last week on speculation of US credit easing measures aimed at boosting its economy.

Mitsubishi is looking to sell the new model for one million yen or less.

The carmaker is building a plant in Thailand that is due to start operation in 2012 with an annual production capacity of 200,000 vehicles, Inada said.

His comments come after reports this week that the auto maker’s bigger rival Toyota Motor is considering moving some domestic production of its popular Corolla sedan to factories overseas to counter the impact of the strong yen.

Inada denied a report in the Yomiuri Shimbun daily that Mitsubishi will gradually transfer production of all its small cars from Japan to Thailand.

Japanese firms have indicated that the strong yen may force them to move more production overseas to remain competitive, which would deal a blow to an economy looking to boost growth and maintain a recovery from recession.

A strong yen is problematic for Japanese makers trying to recoup production costs in overseas markets with weaker currencies. – Source: Sydney Morning Herald

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