Toyota's got hybrids mindset in the blood after the success of third-generation Prius. There is a reports mentioned that Toyota is planning to launch a new compact hybrid based on the next-gen Yaris platform and due to go on sale in Japan for 1.5 million yen by 2011. With that target price, it is made possible by a scale-down version of Toyota's Hybrid Synergy Drive, used in the current Prius and featuring a downsized four-cylinder engine that may make it even more fuel efficient than Prius with 1.8 capacity.

In addition to Toyota production plants in Japan, the report indicates that Toyota may also assemble the compact hybrid in France for the European market. This news comes just weeks after Toyota officially announced its intentions to build a hybrid version of its Auris hatchback in the United Kingdom.

It's expected that the new Yaris-based hybrid will go head-to-head with Honda's recently announced Fit Hybrid.