Toyota Motor Corp. is set to start producing small passenger cars for Fuji Heavy Industries Ltd. to sell under the Subaru brand name in Europe amid stricter emissions targets, a news report said Wednesday.
Toyota, which acquired a 8.7 percent stake in the manufacturer of Subaru vehicles last year, will begin production of the Passo cars as early as this year at a subsidiary's factory in western Japan, according to the Nikkei, Japan's largest business daily.
Fuji Heavy has been trying to expand its European lineup, which includes the Legacy sedan, to include fuel-efficient smaller models — an area of strength for Toyota.
The Passo is to be manufactured by Toyota subsidiary Daihatsu Motor Co., which also sells it as the Boon in Japan and the Sirion in Europe.
Toyota plans to slightly modify the Sirion and supply Fuji Heavy with 5,000 to 10,000 units a year, the Nikkei said. Officials at Toyota and Fuji Heavy were unavailable for comment Wednesday, a public holiday.
The report comes as auto makers scramble to meet new European emission targets for carbon dioxide, a greenhouse gas that is thought to cause global warming.
The auto industry there has set a voluntary target to achieve average emissions for new cars of 140 grams of carbon dioxide per kilometer by 2008, down from an average of 161 grams per kilometer in 2004.
Last year, Toyota and Fuji Heavy announced plans to collaborate in the United States, where the Subaru maker will produce Toyota's popular Camry sedan at its Indiana plant from spring 2007.
