Japan's Asahi newspaper is reporting that Toyota is likely to add a compact hybrid to its line-up in Japan by late 2011.

The hybrid-only model, which may also be produced in France for sale in Europe, will use the platform and engine of a re-modeled Yaris, and is expected to compete with Honda's compact Fit/Jazz hybrid. According to Asahi, the Yaris-based hybrid would sell in Japan for approximately 1.5 million yen, and would feature a hybrid system that's more fuel-efficient than the system currently used in that other Toyota hybrid, the Prius.

Source: Asahi, Automotive News