Toyota plans to launch a JPY1.5m hybrid compact in Japan late in 2011, according to the Asahi newspaper.

That compares with JPY2.05m for the redesigned Prius launched in May and JPY1.89m for the rival Honda Insight. Toyota also planned a cheap(er) version of the previous Prius to match the Honda.

Toyota’s new hybrid-only compact will use the platform and engine of the upcoming redesigned Yaris/Vitz compact with a cheaper and more fuel-efficient hybrid system than the Prius’, the paper said.

Toyota might also produce the new car in France, where it already has a Yaris plant, for sale in Europe, reports said.

Toyota appears to be targeting a planned hybrid version of Honda’s Fit/Jazz due out in Japan next year.

Executives have also hinted at both luxury Lexus-branded and hybrid versions of the iQ city car.

Toyota will also raise its daily production target in Japan to 13,500 units in September and 13,700 in October, nearly double the levels in February-April, as government subsidies in and outside Japan help boost demand, the paper reported.

A Toyota spokeswoman declined to confirm the report  to Reuters.

The automaker does not comment on media speculation and makes announcements only through official channels.