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Toyota to Provide Subaru With Small Cars for Sale in Europe

TOKYO August 16, 2006; The AP reported that Toyota Motor Corp., the world's second-largest automaker, is considering providing small cars to the maker of Subaru autos for sale in Europe, where demand for fuel-efficient vehicles is expected to increase, a news report said Thursday.

The deal would include Toyota's popular Vitz model, called the Yaris in Europe, and its Aygo model, which is only sold in Europe, the Yomiuri newspaper reported without saying how it got its information. The partnership will take effect as early as 2008, it said.

The autos will be built for Fuji Heavy Industries Ltd., the maker of Subaru-brand autos, on an original equipment manufacturer basis, meaning that Toyota will make the cars but Fuji will sell them under its own label, the newspaper reported.

Demand for fuel-efficient small cars is expected to surge in Europe because of soaring gasoline prices and new environmental rules to be implemented in 2008 by the European Union to limit carbon dioxide emissions, the Yomiuri said.

Toyota spokesman Paul Nolasco was not immediately able to comment on the report.

The automaker currently doesn't make vehicles for other companies on an OEM (Original Equipment Manufacturers) basis, or sell autos made by others.

In October last year, U.S. automaker General Motors Corp. said it ended its alliance with Fuji by selling its entire 20 percent stake in the company. At that time, Toyota bought an 8.7 percent stake in Fuji for US$315 million and became the company's top shareholder.

In March, Toyota and Fuji said they will produce Toyota Camrys at Fuji's U.S. plant in Indiana starting in spring 2007.