TOKYO, Nov 20 (Reuters) - Mazda Motor Corp will begin production at its new Mexico factory in January, the carmaker's chief said on Wednesday, describing the plant as a key foreign base for the Japanese company as it pares its reliance on domestic output.

"I just visited the Mexican plant and all preparations are complete," Mazda's head, Masamichi Kogai said at a press conference at the Tokyo Motor Show. "This factory will become a crucial overseas base for Mazda," he added.

Selling just over a million cars a year and with most of its vehicles built in high-cost Japan, Mazda has struggled to compete with bigger automakers that are 10 times its size. In the four years to March 2012, the company chalked up combined net losses of nearly 250 billion yen ($2.5 billion).

Since losing the backing of Ford Motor Co, which once owned a third of the Hiroshima-based company, Mazda has drawn closer to Toyota Motor Co winning access to its hybrid technology. Mazda will also build cars for Toyota at the Mexico plant.