Toyota will not abandon Europe's minicar segment unlike rivals such as Ford and Opel but the next version of the Aygo could be electric.
The current Aygo, which was launched in 2014, will get a successor, Toyota Europe CEO Johan Van Zyl said.
"The Aygo has been a very good product for us in terms of conquest and bringing younger people into our brand. We still see it as a good segment for us to be in," Van Zyl told Automotive News Europe in an interview.
The Aygo is currently Toyota's only car sold in Europe without a hybrid option. Van Zyl said a replacement Aygo might be electric given the car's urban usage.
"Some cities are applying zero-emissions zones, so we must think about the future and say, 'how are we going to ensure that we have an electrified version of an A (minicar) - or sub A-segment car that we'll be able to utilize for these cities?'" he said.
Toyota's development partners for the current Aygo, Peugeot and Citroen, have indicated that any replacement for their minicars will need to be electric.
The Aygo is built alongside the Peugeot 108 and Citroen C1 in a joint plant with PSA Group in Kolin in the Czech Republic.
Toyota sold 83,030 Aygos in Europe in the first 10 months, up 3.7 percent, according to JATO Dynamics market researchers. Peugeot sold 48,542 units of the 108, down 1.4 percent and Citroen sold 44,399 units of the C1, down 1.9 percent.
Toyota has agreed to buy PSA's share of the joint venture in 2021. This means Toyota has to fill a plant with annual capacity of 300,000 vehicles.
Van Zyl said the company will be able to keep the plant busy. "We will utilize the full capacity in future," he said, without disclosing which cars Toyota intends to build there.
Toyota remains one of the few automakers, along with Hyundai and Kia, to commit to Europe's smallest segment.
Automakers are increasingly abandoning the segment due to the cost of updating the low-profit minicars to meet tougher European Union regulations to reduce CO2 and NOx emissions.
Most recently, Ford and Opel exited the segment. Volkswagen Group's VW Up, Skoda Citigo and Seat Mii minicars are expected to be replaced by battery-powered cars based on a shortened version of the automaker's Modular Electric Drive Toolkit (MEB) architecture.
Replacing the Aygo with a new gasoline version could be unviable in such the price-sensitive minciar segment. The cost of cleaning up NOx emissions on a gasoline engine car to pass Euro6d Temp standards due in September next year is around 2000 euros a car, Ford has estimated.
Toyota has said it will launch three battery electric vehicles by 2021 in Europe, including an EV version of the Lexus UX compact SUV. The other two are expected ot be an electric version of the C-HR compact SUV and a PSA-sourced van.
Toyota will be able to carry on selling gasoline Aygos without penalties after tough new CO2 regulations start in January because its hybrid models account for over half its sales across the automaker's European product range, helping to reduce the company's average CO2 emissions.
