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U.S. domestic auto production for 1994 is expected to overtake Japan's for the first time since 1980, says a leading Japanese business newspaper.

The Nihon Keizai Shimbun forecast the estimate of Japan's auto vehicles including passenger cars and commercial vehicles for the year, showing it is likely to decrease 900,000 units, to around 10.3 million vehicles."Unlike the U.S. market, the Japanese market is still weak," said Hiroshi Sato of the Fuji Economic Research Institute, forecasting a decline in Japan's auto production.

In addition to the weak Japanese market a dip in car exports will also add to the output drop, said Sato.

The newspaper's estimate was based on production figures from the January-July period, auto makers' production plans for the following three months and estimated production figure for the rest of the year.

A total figure in the production plan for the August-October period, released earlier by 11 domestic car makers, ended with output of 2.49 million vehicles, the business daily said.

The Nihon Keizai, or Nikkei as it is known, predicts that production for the remaining two-month period of November and December will decrease by up to 5 percent from the same period last year.

U.S. auto production for the year, however, is on an upward track. Along with its economic recovery and growing auto sales, it is estimated to reach beyond 11 million units the Nikkei said.

Analysts said there is a clear difference of purchasing power between the U.S. auto market and the Japanese one which is still showing slow progress as it remains mired in an industry slump from last year.

Japan's auto exports for the first six months in 1994 dropped by 555, 000 units to 2.23 million vehicles with many manufacturers increasing overseas production as the Japanese currency has risen against the U.S. dollar.

A high yen makes Japanese exported cars expensive in foreign markets, and auto makers shift their production base to foreign nations to take advantage of lower offshore production prices.

"Japan's production figure includes quite a large portion of exports," Sato said. "Drops in exports automatically means production cutbacks."