Toyota has said it may release diesel versions of its Lexus luxury range in Europe by 2006 to catch up with local rivals, according to the Detroit News.

"Japanese automakers, including Toyota, have been slow in developing diesel engines while the Europeans took the lead," the newspaper cited managing director Tokuichi Uranishi, who oversees the company's European business, as saying in an interview in Japan.

Diesel Lexus cars will be ready in "two to three years," he reportedly said.

The Detroit News said that about 40% of the 14.4 million cars sold in Europe last year were diesel-powered, reflecting consumers' preference for more economical cars and making Europe the world's biggest diesel market. Toyota, which had 4.4% market share there in 2002, must win more to meet its goal to raise its global share to 15% early next decade from 10% now, investors told the paper.

"Diesel engines are the key for Japanese automakers to expand in Europe," Norihiko Kamada, who helps manage $US1.2 billion at Chuo Mitsui Asset Management Co., told the Detroit News "Toyota's becoming more visible in Europe, and its results show that."

In an interview, Uranishi told the Detroit News that Toyota, which has just launched a fully redesigned, UK-built Avensis in Europe expects its first operating profit there in three years for the business year ended March 31.

"Sales from Europe need to contribute a big portion for Toyota to meet the 15% target," he reportedly said. "Toyota has to increase its share."

Diesel vehicles now make up about 30% of Toyota's total vehicle sales, the Detroit News noted.