Tokyo - Japan's Mazda Motor Corporation on Wednesday said it had no plans to build a new plant in North America, opting to step up production in Asia.

With car sales in the United States in a slump, Japan's fifth largest automaker, which is 33.4 percent owned by US auto giant Ford, said it was expanding domestic production capacity and building a factory in Thailand.

"We are convinced that not attempting to expand production in North America was the right management decision," it said in a statement.

The statement followed a news report that Mazda had frozen plans to build a factory in North America because of sharp drops in new vehicle sales in the United States and a business slump at Ford.

Mazda had initially intended to roll out fuel-efficient midsize cars and other models from the first half of the 2010s at a second North American plant, the Nikkei economic daily said without naming sources.

It had considered using an idle Ford factory or building a new plant in partnership with the US firm, the report said.

Press reports said last week that Ford plans to sell most of its shares in Mazda to raise badly needed cash amid the current global financial crisis.

Ford invested in the Hiroshima-based firm for the first time in 1979 and raised its stake to 33.4 percent in 1996 when the Japanese carmaker's business slumped.

The two companies have since profited from joint development of compact cars and Mazda has recovered its financial health.

Mazda's operating profit slipped 12 percent in the three months to June from a year earlier to 28.26 billion yen due to a stronger yen and rising material prices.

However, Ford made a record $8.7-billion loss in the second quarter. - AFP