* TPCA delays plan to boost capacity to 340,000 cars
* Expects output to grow by 1.8 percent to 330,000 this year
* Sees no European market rebound this year
* Plans no extraordinary shutdowns in coming months
By Martin Dokoupil
PRAGUE, March 25 (Reuters) - Czech carmaker TPCA has postponed a plan to boost production capacity to 340,000 cars this year, due to the global downturn, but its output should still grow slightly on higher demand for smaller cars, its head said on Wednesday.
TPCA, a 50-50 joint venture between Japan's Toyota Motor and France's PSA Peugeot Citroen, has weathered the impacts of the economic crisis better than other European producers as people shifted to less expensive models.
But its president, Yasuhiro Takahashi, said the carmaker wanted to stay cautious as it was not clear how long an incentive scheme to replace older cars in Germany keeps boosting demand for small cars.
"The main reason (to delay the expansion) was that sales fell a bit in the autumn," Takahashi told Reuters after presenting last year's results.
"Now we are analysing what to do ... Small cars are selling well in Germany but this could end very soon as the scrappage amount is limited. We are ready to go forward when conditions are right," he said.
The third biggest Czech exporter, which revealed its expansion plan in October, increased production of its budget Aygo, Peugeot 107 and Citroen C1 models by 5 percent to 324,289 last year.
TPCA, which started production in 2005, plans to assemble 330,000 cars this year, reaching its maximum capacity, Takahashi said.
The carmaker plans no extraordinary shutdowns of assembly lines at its Kolin plant, 67 km (42 miles) east of Prague, in the coming months. TPCA's outlook contrasts with that of Volkswagen's Skoda Auto, the top Czech firm by turnover, which expects unit sales to show a single-digit drop this year due to the deepening recession in western Europe.
The Czech economy is highly dependent on the car industry, which accounts for 21 percent of overall exports and is expected to axe 13,500 jobs to some 124,648 by June.
The country's exports plunged by 24 percent in January, their fastest annual pace on record, and companies slashed jobs, pushing unemployment to a two-year high of 7.4 percent in the same month.
"We can very realistically expect that the (car) market (in Europe) will not rebound this year and the very difficult period will continue," Takahashi said.
The rapid deterioration in the country's export performance led the government to expect the economy to shrink by up to 2 percent this year in a first contraction since 1998.
TPCA said it scrapped the plan to hire additional workers at the turn of the year due to the market weakness and plans to keep employment at around the current 3,582 this year.
The carmaker's revenue fell by 4 percent to 49 billion crowns ($2.42 billion) last year, mainly dented by a strong crown. (Editing by Greg Mahlich)