The Camry is most likely to be the car Fuji Heavy’s US factory builds for Toyota, while Toyota will build small cars for Fuji to sell in Europe, according to Kyodo News.

After the outline of the deal was announced earlier this week, sources told the news agency that Toyota and Subaru-maker Fuji are currently negotiating production of about 100,000 Toyota vehicles annually in the United States in 2007 or later, and are expected to reach an agreement on the first portion of the order by the end of the year.

The Camry sedan is popular in the US market and Toyota’s own US factories are currently at full production for the model, the sources reportedly said, adding Toyota may farm out the manufacturing of other models, including sport utility vehicles, to Fuji Heavy’s factory in the future.

Kyodo News noted that Fuji Heavy began rolling out models, such as the Legacy, at its factory in Indiana in 1989. While the factory, built jointly with Isuzu Motors Ltd., makes 120,000 vehicles a year, it has a spare production capacity as Isuzu withdrew from the joint project in 2003.

Toyota and Fuji have been discussing ways to boost their cooperation in producing and developing vehicles at a committee of executives from the two automakers, according to the report.

The news agency’s sources said the joint development of new vehicles is also one of the other issues being considered by the committee.

An interesting development is that Fuji Heavy has asked Toyota to provide it with minicar models for the European market under an original equipment manufacturing accord.

Fuji has in the past sold Hungarian-produced Suzuki Swift derivatives under its Subaru brand in Europe.