(Adds details, share price)
TOKYO, Oct 30 (Reuters) - Mitsubishi Motors Corp, Japan's fourth-largest auto maker, said on Thursday it would postpone plans to expand capacity at its Illinois plant, directing its limited resources into sales and brand promotion instead. Mitsubishi said in March that it would spend $200 million to expand the capacity of its Normal, Illinois, factory by 25 percent, allowing it to make 300,000 vehicles a year.
"We have decided our priority in North America at the moment is to concentrate our resources on sales of our new models and strengthening our brand," the company said in a statement.
"We will postpone the capacity boost until a change in market environment and/or our product line-up requires it."
Mitsubishi's U.S. operations -- once the pillar of its earnings -- are in tatters and have drastically altered their sales strategy to focus on creditworthy clients after discovering too many car buyers were not paying their bills.
The auto maker has suffered double-digit falls in U.S. sales, forcing it to raise incentives to sell cars and reduce inventory.
Losses at its North American financing unit and weak U.S. sales prompted Mitsubishi to slash its group net forecast for the year to March to 10 billion yen ($92.4 million) from 40 billion yen, but many analysts say the new figure is too optimistic.
Ratings agency Standard & Poor's lowered its rating on Mitsubishi this month to "B+pi" from "BB-pi", citing credit losses and a worsening sales performance and said the rating could be cut further if the situation worsens.
Mitsubishi's shares closed morning trade up 0.83 percent at 244 yen, while Tokyo's Nikkei average lost 0.04 percent. ($1=108.19 yen)