Toyota Motor Corp. unveiled Wednesday its new "ultracompact" iQ, aiming to stimulate demand for fuel-efficient "premium" cars in the sluggish domestic auto market.

Toyota calls the iQ "a micro premium car." It measures less than 3 meters in length but has enough space for three adults and a child or luggage. It's not a minicar, because the engine is too big.

"The iQ is a new car for a new category that has drastically changed the conventional notions about vehicle size," Toyota President Katsuaki Watanabe said at a media event in the Makuhari Messe convention center in Chiba Prefecture.

"We greatly expect it to be a 'market creator,' " he said.

Demand for fuel-efficient cars is growing globally amid high energy prices, but the auto market overall faces slowing sales amid the financial crisis.

The 1.0-liter engine in the iQ gets a maximum 23.0 km per liter, Toyota said.

The car is designed for convenience in cities, boasting a minimum turning radius of 3.9 meters, one of the shortest in the industry, Toyota said.

It has nine air bags, including the world's first rear window air bag to protect back-seat passengers' heads in a rear-end collision, the automaker said.

Priced at ¥1.4 million to ¥1.6 million, the iQ will go on sale Nov. 20 in Japan. Sales in Europe will start in January.

Toyota plans to produce 100,000 a year with an annual sales target of 72,000 in 40 European countries and 30,000 in Japan.

The iQ was originally shown in concept form during last year's Frankfurt Motor Show. It later appeared in motor shows in Geneva in March and Paris this month.