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Mazda is to stop building its Mazda2 subcompact model at Ford's Valencia plant in Spain and shift production of the next model entirely back to Japan.

At present the company builds the model, also known as the Demio, at Valencia and at its Ujima plant at Hiroshima in Japan. Ujima will become the sole supplier of the car when the new model comes on line later this year.

Hisakazu Imaki, Mazda CEO, said: "Our intention is to consolidate production of the next B-car into one location to maximise the economies of scale and efficiencies that this would offer. After assessing all risks and opportunities, it made sense to select Japan as the location."

Mazda has shared the Valencia operation with other parts of Ford, and has built the Mazda2 there since 2003. Ford says the move will not affect the plant since it will maintain volume through increased production of other models, such as Fiesta.