Tadashi Arashima, the chief of Toyota Europe, announced the company plans a compact car from Lexus that will compete with cars like BMW 1 Series and the Audi A3. He also said he wants to double the sales of hybrid cars.

Arashima said: "We will offer a car in the compact class. We need smaller and more efficient vehicles, developed to meet the new CO2 emission targets."

Toyota wants to raise the hybrid sales from the current 50,000 units to 60,000 units in 2009 and 100,000 units. In 2009 Toyota will offer the new generation Prius that will also get a family van version. A plug-in version is scheduled for 2010.

.