TOKYO, Jan 25 Japan's Suzuki Motor Corp. 7269.T expects its global car sales to r

TOKYO, Jan 25 (Reuters) Japan's Suzuki Motor Corp. expects its global car sales to rise 8 percent to a record this year as demand for its small, fuel-efficient cars remains firm in India and Europe.

Suzuki, the fourth-biggest Japanese auto maker in terms of market value, has enjoyed record profits thanks to a gradual global shift away from gas-guzzlers and has set a goal of producing 3 million cars in the 2009/10 business year. It expects to make 2.56 million cars and sell 2.35 million in 2007.

With its expertise in building tiny but long-lasting cars, analysts have said Suzuki could be an attractive target for a capital tie-up after former top shareholder General Motors Corp.

whittled down its stake last March.

But Chief Executive Osamu Suzuki played down the possibility of another equity link, saying he had agreed with GM counterpart Rick Wagoner to keep the status quo for the time being.

Suzuki had bought back all but 3 percentage points of the 20 percent stake that GM had held in it to help the cash-strapped U.S.

auto maker last March, and the two had agreed at the time to leave an option for GM to buy back the shares for up to a year.

''We agreed to maintain the current relationship with a long-term, strategic view,'' Suzuki told a news conference, adding he had met with Wagoner last November in Japan.

''It's not realistic to expect a company's finances to improve like magic after only a year,'' he said, stressing that Suzuki's healthy balance sheet would allow it to hold on to the 17 percent stake, purchased for 250 billion yen ($2 billion).

Suzuki's rosy outlook made its shares the top performer among Japanese auto stocks last year, with a jump of 54 percent.

Shares in Suzuki gained 0.3 percent to 3,480 yen on the news, outperforming a sharp fall in other auto stocks. Suzuki's current market value is just $2.5 billion short of GM's $18 billion.

OVERSEAS OUTPUT TO SPIKE To meet brisk demand in markets from Italy to India, Suzuki is scheduled to ramp up its production overseas by 19 percent to 1.35 million units this year, with added capacity in India, Pakistan, Hungary and Canada.

In contrast, Suzuki expects its sales in the domestic Japanese market to drop 3 percent to 675,000 units. Of that, 660cc minivehicles are expected to fall 4 percent to 585,000 units, in line with Suzuki's plan to deliberately shrink output to free up capacity for more profitable compact cars.

The decline is almost certain to place Suzuki behind arch rival Daihatsu Motor Co. , a unit of Toyota Motor Corp. , as Japan's top seller of minivehicles for the first time in 35 years.

Daihatsu, keen to reach the pinnacle in 2007 -- its 100th year in business -- last month forecast its minivehicle sales at 620,000 units for this year.

CEO Suzuki, however, said he was not preoccupied with ranking so long as the auto maker's overall production was growing.

More of a concern, he said, was intensifying competition in India, where Suzuki has dominated the market for over two decades through its stake in national maker Maruti Udyog Ltd.

''As a market, India has huge potential,'' he said. ''But I think it will become more competitive, even more than China is now. We can't assume we'll be No.1 forever.'' Still, Maruti, which controls about half the Indian market, is due to get a major sales lift this month with the launch of a diesel version of the popular Swift subcompact car, and analysts said the future will likely remain bright.

''Suzuki still has time to strengthen its operations and enhance its relative competitive position by 2009 before the global (auto makers) become fully involved in the conflict,'' JP Morgan analyst Takaki Nakanishi wrote in a report on Thursday.

Suzuki, also the world's third-biggest motorcycle maker, said it expected sales of motorbikes and all-terrain vehicles (ATVs) to rise 22 percent to 3.552 million units in 2007.

It forecast its worldwide car production to rise 9 percent to 2.559 million vehicles. Last year, global car output rose 10 percent to a record 2.342 million units, while sales grew 8 percent to 2.174 million units.

Following are Suzuki's output and sales forecasts for 2007: UNITS CHANGE ON YEAR Global car sales: 2,350,000 +8 pct - Japan: 675,000 -3 pct - 660cc minivehicles: 585,000 -4 pct - compact: 90,000 +7 pct Global car output: 2,559,000 +9 pct - Japan: 1,209,000 +0 pct - Overseas: 1,350,000 +19 pct Global motorcycle sales: 3,552,000 +22 pct ($1=120.55 Yen) REUTERS PV DB1228