TOKYO (AP) - Toyota Motor Corp. is set to produce small passenger cars for Fuji Heavy Industries Ltd., which will be sold under the Subaru brand name in Europe amid stricter emissions targets, a news report said Wednesday.
Toyota, which acquired an 8.7 percent stake in the manufacturer of Subaru vehicles in 2006, will begin production of the model Passo 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, which is 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.
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 beginning in the spring 2007.