A report in French newspaper La Tribune says that Toyota is considering building a new small hybrid car at its Valenciennes site, which already produces the Yaris small car.

Toyota has denied the report.

Toyota is said to be planning sales of a Vitz/Yaris-based hybrid car in 2011.

The new car will reportedly have a fuel economy of more than 40 kilometres per litre, against 38 kilometres for the third-generation Prius.

The small hybrid will reportedly be cheaper than Toyota's existing hybrids, and is expected to be sold in Japan, Europe and the United States.