The report comes just days after money-losing GM said12 facilities by 2008 and cut 30,000 jobs in a move that will slash the number of vehicles it is able to build in North America by about 1 million a year.
The combined developments could help Toyota surpass GM in worldwide production, although it's unclear if that will happen because Detroit-based GM is growing rapidly in Asia.
Toyota expects to produce 8.1 million vehicles this year, while GM expects 9 million, according to Greg Gardner of Harbour Consulting, a manufacturing consulting firm.
Toyota will also chip away at GM's lead with a new pickup truck plant scheduled to open next year in San Antonio, Texas, that will add an additional 200,000 vehicles to Toyota's annual capacity. The Japanese company's output will be boosted by another 100,000 vehicles in 2008, when Toyota's new RAV 4 plant comes online in Canada.
Under the latest expansion plans, the world's No. 2 automaker has asked Fuji Heavy Industries, maker of Subaru autos, to start building Toyotas in 2007 at a Lafayette, Indiana, factory operated by Fuji Heavy's wholly owned subsidiary, Subaru of Indiana Automotive, the Asahi newspaper reported Wednesday, without citing sources.
Company representatives were not available for comment Wednesday, a national holiday in Japan.
Ann McConnell, a spokeswoman for Subaru of Indiana, said Fuji Heavy Industries and Toyota Motor Corp. have been in discussions, but that there has been no word of a decision yet.
Lafayette Mayor Tony Roswarski also said there had been no final decision, but that the city has been working with Toyota and Subaru of Indiana. He said a "considerable amount of study" will have to be done before a decision is made.
"We are certainly hopeful that the Lafayette site is chosen," he said.
The newspaper said there were five to six candidate models for production, with the number manufactured annually to gradually increase to 100,000 vehicles. Earlier reports have suggested that Toyota might produce hybrid vehicles at the Fuji plant.
The Indiana plant produced nearly 120,000 Subaru models last year.