Honda plans to build new plants in Thailand, Vietnam, India and Argentina while stepping up output in North America, even as Japan's shrinking population dims prospects for future sales growth in its home market.

Honda on Wednesday said it hoped the plan would boost its annual production capacity around the world to 4.7 million vehicles by 2010 from 3.9 million at present.

Honda, which overtook rival Nissan Motor Co. last year to become Japan's number two automaker, said it had delayed plans to introduce its Acura luxury brand in Japan by two years until 2010 due to the tough market conditions.

But it unveiled plans for a 246-million-dollar research and development centre in China to design a new Guangzhou Honda brand vehicle with its joint venture partner specifically for the Chinese market to go on sale from 2010.

"It will be a low-priced car unlike anything Honda would sell on its own," said Honda president Takeo Fukui, who did not rule out the possibility of the vehicle being exported to Southeast Asia in the future.

Honda said it had already begun construction of a second auto plant in Thailand at a cost of about 200 million dollars.

Due to start up in the second half of 2008, the factory will eventually double the automaker's production in the country to 240,000 vehicles a year.

Honda has also started work on a second plant in the suburbs of Hanoi with an investment of 65 million dollars to raise its production of motorcycles in Vietnam by 50 percent to 1.5 million units from the second half of 2008.

It confirmed earlier plans for a second auto plant in India with an investment of about 230 million dollars that will churn out about 60,000 vehicles a year from late 2009.

In Argentina Honda plans to spend 100 million dollars on a new automobile production plant to start up in 2009 with an annual production capacity of 300,000 compact vehicles to meet growing demand in South America.

Japanese automakers have been ramping up their global production facilities to keep pace with brisk demand for their vehicles overseas and to take advantage of lower labour costs outside of Japan.

Honda Motor has enjoyed years of record profits but its earnings slipped slightly in the last financial year to March amid tough competition in its home market and higher raw material costs.

"Weak domestic demand is a very large issue," Fukui told a press conference.

"Our domestic sales are in a severe situation. Our export business is our main driving force," he added.

Honda is also expanding in North America as Asian automakers step up the pressure on embattled US rivals such as General Motors and Ford.