"We are trying to raise the chances of that happening," he said, adding that the world's third-biggest automaker had not yet decided whether most of the 300,000 vehicles would be sold under the Toyota brand.

But he said no decision had been made and declined to identify the other automakers.

Toyota made its name as the world leader in hybrid technology in December 1997 when it launched the Prius sedan, the first mass-produced vehicle to combine a battery-powered motor and a petrol engine.

Even so, its announcement in June last year that it was aiming for a tenfold jump in production by 2005 raised eyebrows in the industry, with many assuming that the auto giant intended to sell all the vehicles under the Toyota brand.

A so-called original equipment manufacturer (OEM) agreement to supply other automakers could help those firms meet increasingly tough environmental standards by reducing the overall emissions levels of their product range.

But it would also be seen as a tacit admission that they lagged far behind the Japanese automaker in this field.

For Toyota, supplying hybrids to other automakers would be a much quicker and effective way of taking the new vehicles from a niche market to being widely accepted by consumers.

TOYOTA AIMS TO HALVE COSTS

Hybrids, which unlike pure electric vehicles do not need to be plugged in to be recharged, are cleaner-burning and said to be roughly twice as fuel-efficient as traditional internal combustion engine vehicles.

They are seen as a near-term solution to reducing the auto industry's burden on the environment before fuel-cell vehicles, which use hydrogen to produce electricity and emit only water, become mainstream in a few decades' time.

Honda Motor Co is the only other automaker to mass-produce hybrid vehicles, selling the two-seater Insight and a hybrid version of the Civic. Its cumulative sales since November 1999 have so far totalled 12,846.

In contrast, Toyota's global cumulative sales have topped 100,000, accounting for 90 percent of the world's hybrid vehicle market. Some 37,000 vehicles were sold in 2001.

In addition to the Prius, now in its second generation, Toyota's line-up includes a hybrid version of its Estima minivan and a version of its luxury car Crown that uses a "mild" - less efficient but less expensive - hybrid system.

Toyota also says its hybrid vehicles are now profitable whereas Honda says it still makes a loss on its models.

Other major automakers such as General Motors Corp , Ford Motor Co and DaimlerChrysler AG have said they will launch hybrid vehicles in 2003 or 2004.

But they say production will be limited due to the relatively high costs and uncertainty about their popularity.

Their price tag - the Estima hybrid sells for about 500,000 yen ($3,840) more than an ordinary three million yen Estima minivan - remains a key issue.

Watanabe said, however, the premiums consumers pay for hybrids were on the way down.

"We are working on both improving the technology and cutting costs by half," he said, declining to comment on a timeline for the planned cost reductions.

But he added that working out what premium consumers should theoretically pay for the new technology was difficult.