may eventually make its own diesel engines for the Yaris/Vitz/Echo supermini range
in Japan.

The popular model, which goes into production at a brand-new factory in France
soon, is likely to be initially launched in diesel form with Peugeot engines
in a deal similar to that struck for European-market Corollas.

But Toyota, soon to launch diesel versions of its Previa minivan and RAV4 SUV
models in Europe, using newly-developed D4-D direct-injection diesels, may soon
produce a similar engine for its supermini range in either Europe or Japan.

A spokesman said that production details have not been decided and the engines
could be produced in Japan because there is spare capacity there. Toyota also
has an engine factory in Wales and a gearbox plant in Poland which could make
the motors.

The Nihon Keizai newspaper has previously said that Toyota would make 100,000
supermini diesels every year in Europe.