Daihatsu, which recently said it would abandon Europe by 2013, plans to start making a low-priced compact car in Indonesia that year for sale in southeast Asian nations.

Daihatsu will develop a fuel-efficient vehicle in Indonesia and supply 70% of output branded Toyota, the Nikkei business daily said in an unsourced report, according to AFP.

The JPY900,000 ($10,750) car - the cheapest Toyota worldwide - will be a little smaller than the Etios small sedan launched in India late last year, the reports said.

Daihatsu already has a factory in Jakarta capable of assembling 280,000 vehicles a year, and plans to spend JPY20bn to build a new plant, which will have an initial annual capacity of 100,000 units, the paper said.

Toyota and Daihatsu are the first and second best-selling automakers in Indonesia, controlling 53% of the market between them, the Nikkei said.