Mitsubishi Motors may keep Japan plant open-paper

TOKYO, Apr 12 (Reuters) Mitsubishi Motors Corp. will probably keep operating a domestic plant that had been slated for closure, a newspaper said on Wednesday -- a move that would signal the embattled auto maker is more confident of its potential for recovery.

The Yomiuri Shimbun said Mitsubishi Motors was now likely to keep its Okazaki plant in western Japan running and would meet with key shareholders Mitsubishi Heavy Industries Ltd and Mitsubishi UFJ Financial Group Inc. as early as next week.

In 2004 Mitsubishi Motors decided to shutter the plant by October 2005, but that was postponed last April due to concerns about the cost of such a move.

''Our senior executives said at the time that the postponement would be for one to two years and that the matter be reviewed once the goals in our revival plan were in sight,'' a company spokesman said. ''That position hasn't changed,'' he said, declining to comment further.

Mitsubishi Motors' shares were up 0.8 percent at 253 yen in afternoon trade compared with a 1.5 percent decline for auto subindex ITEQP.

Analysts said that while there were risks that the auto maker might indefinitely saddle itself with excess capacity, it made sense for the company to reconsider keeping the Okazaki plant open as its other domestic factory was now running at full capacity.

Mitsubishi's Mizushima plant, also located in western Japan, specialises in minivehicle production. The Okazaki plant makes the Colt small car and the Grandis minivan.

''Cutting out Okazaki says we are not in the registered car market,'' said Christopher Richter, analyst at CLSA Asia-Pacific Markets.

''Given that sales are brighter in Japan and although they are not brilliant elsewhere in the world, I would be looking to wait and watch because once you close it, it's hard to reopen again,'' he said.

Despite strong sales in Japan, MMC faces severe overcapacity at its plants in the United States and Europe. At its NedCar factory in the Netherlands, the auto maker faces a potential strike as it considers slashing around 1,000 jobs and moving to just one shift from two.

Long reeling from a recall scandal, Mitsubishi Motors' operations turned profitable for the first time in 11 quarters during the October-December period despite disappointing sales in the crucial U.S. and Chinese markets.

REUTERS PV SP1211