Mazda Motor Corp is set to announced plans for a new factory in the central Mexican state of Guanajuato.

A source familiar with the matter said that the factory will be the fourth overseas assembly site for the Japanese automaker after the United States, China and Thailand all joint ventures with former top shareholder Ford Motor Co.

The source added that construction of the new plant in Mexico is set to begin this fall, with vehicle production to start in the second half of 2013. The source added that Mazda plans to build compact cars, initially for sale in Mexico and South America and eventually export to North America.

A second source said that the investment is likely to be in the hundreds of millions of dollars, to be shared with trading company Sumitomo Corp. The factory will have initial capacity to build at least 50,000 cars a year.

Japanese automakers are under pressure to reduce exports as a strong yen makes it difficult to make money on exports, especially for smaller, lower margin cars.

Mazda is especially vulnerable, producing more than two thirds of its 1.277 million vehicles in Japan in the business year that ended in March. It shipped more than 80% of Japan-made cars overseas.

(Sourced from Reuters)