Mitsubishi Motors Corp. will eliminate 105 factory jobs by August at a U.S. plant as it cuts production on slowing sales there.

The company, Japan's fastest-growing car exporter, on Wednesday offered United Auto Workers employees at the Illinois plant a voluntary retirement plan, Mitsubishi Motors spokesman Kai Inada said Monday.

The union agreed to the reduction, which is the equivalent of 6 percent of the factory's workforce, he said.

Mitsubishi's production fell 18 percent in the four months through April amid credit market turmoil and a surge in gas prices. Employers in the United States cut the most workers in five years in March, according to the Labor Department.

"Our move is to respond to a decrease in production volume at the plant," Inada said. "Our car sales are dropping because of higher oil prices and the worsening U.S. market."

Production at the plant fell 19 percent to 75,527 units in the year ended March 31, Inada said. Mitsubishi Motors' sales in the U.S. dropped 18 percent to 35,959 units in the four months to April.

The company makes Galant sports sedans, Endeavor sport utility vehicles and Eclipse sports cars at the Illinois plant.

Mitsubishi Motors said in February it will close its Australian plant, cutting 930 jobs.

MMC issues recall

Mitsubishi Motors Co. will recall 26,722 vehicles domestically to fix faulty headlights.

The company will recall five passenger cars, including the Lancer sedan and eK wagon, made between August 2006 and last January, it said in a statement Monday to the Land, Infrastructure, Transport and Tourism Ministry. There were no accidents related to the defects, the company said.