-- Toyota Motor Corp. and French carmaker PSA Peugeot Citroen are discussing joint production of compact cars in Europe with an engine size of between 800cc and 1000cc, sources familiar with the talks said Friday.
Toyota expects to develop a fuel-efficient compact model jointly with France's biggest automaker to cut development and production costs. It needs to develop a model that meets stricter fuel economy regulations to be introduced in the European Union in 2008, the sources said.
The Tokyo Shimbun reported in its Friday morning edition that Japan's largest automaker and Peugeot Citroen have been negotiating since last year on establishing an equal joint venture by 2004 for annual production of about 400,000 units of an 800cc compact car.
The newspaper said production would possibly be located somewhere in Eastern Europe where production costs are low, such as the Czech Republic, Hungary or Poland, adding that the models would be sold under both the Toyota and Peugeot Citroen brands.