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NEW ORLEANS (Kyodo) Nissan Motor Co. will start producing and selling a new compact car with a 1,500cc-level engine in North America, possibly in 2006, Nissan President Carlos Ghosn said Sunday.

The automaker is also considering boosting production capacity in North America, which could involve building a new plant when sales reach 1.25 million vehicles in the U.S. market, Ghosn said, ruling out the possibility Nissan would form a capital link with struggling Mitsubishi Motors Corp.

Nissan achieved record sales of about 980,000 vehicles in the United States last year.

Its entry into the U.S. compact car market is likely to intensify competition among Japanese automakers there. Toyota Motor Corp. released its Scion model targeting younger drivers last year, and Honda Motor Co.’s U.S. unit plans to import from Japan compact cars similar to the Fit subcompact in 2006.

Ghosn said Nissan’s compact car sector has been profitable and the company is not considering importing cars from Japan because it aims to keep the ratio of local production to its overall sales in the U.S. virtually unchanged.

Nissan will use the same chassis produced for its March compact in the new vehicle and make decisions on the scale of annual production after assessing demand, he said.

Ghosn declined comment on where the automaker intends to produce the new compact. Nissan’s Mexico plant, which produces Sentra cars with 1,800cc engines, is considered a likely candidate.

Ghosn said it is too early to decide about raising production in North America.

Nissan has set an annual sales target of more than 1.20 million vehicles for the U.S. market for fiscal 2007, and might start increasing production capacity in 2008.

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