Japan's Sanyo Electric Co Ltd (6764.T) said it plans to boost its capacity to make auto-use nickel-metal hydride batteries by 75 percent to 3.5 million cells a month by March 2010 to meet growing demand.

The latest target compares with its original plan to raise its monthly output capacity for the batteries, used in gasoline-electric hybrid vehicles, to 2.5 million cells by March from 2 million cells now.

During the devastating global slump in demand for cars, fuel-sipping hybrids have become a bright spot for the industry with Honda Motor Co Ltd (7267.T) and Toyota Motor Corp (7203.T) seeing robust demand for their latest models.

Sanyo, the world's largest maker of rechargeable batteries, provides its nickel-metal hydride batteries to Honda and Ford Motor Co (F.N).

Sanyo Executive Vice President Mitsuru Homma announced the plan during the company's annual shareholders' meeting on Friday, but did not specify the size of capital spending needed for the expansion.

Shares in Sanyo closed down 0.8 percent at 253 yen, underperforming the Nikkei average .N225, which gained 0.8 percent.