Japanese carmaker Toyota Motor <7203.T> expects to increase sales and market share in Europe this year despite the region's gloomy outlook, an executive said.

Toyota may source parts for its hybrid cars from Europe, should sales in the region reach 150,000-250,000 vehicles, another executive said on Monday.

Toyota plans to increase sales in Europe to at least 835,000 this year from 822,386 in 2011 and to grab a 4.5 percent share, up from 4.2 percent and, it hopes, driven by the hybrid version of the Yaris subcompact and other models, Toyota Motor Europe president and chief executive Didier Leroy said.

He forecast the auto market in western Europe to fall a worse-than-expected 5 percent this year, while the market in eastern Europe market was seen stable.

We believe that there is a big crisis of confidence for the customer in Europe, Leroy, who became the first non-Japanese head of Toyota's European operations in 2010, told reporters on the eve of the Geneva Auto Show.

Alain Uyttenhoven, vice president at Toyota Europe, said it would make sense to produce electric batteries and hybrid components in Europe when sales reached 150,000-250,000.

Even though the Auris hybrid is built in Britain, all its parts are imported from Japan, meaning higher costs. This same problem could also affect the market competitiveness of its smaller Yaris hybrid when production begins in France in April.

The next thing that we would like to localise in Europe is probably the hybrid powertrain of our cars, Uyttenhoven said, adding the company has no clear dates for that.

Toyota and Lexus hybrid sales reached 84,839 vehicles in Europe last year, accounting for 10 percent of sales.

Uyttenhoven said Toyota planned to increase the portion of hybrid vehicles to its total sales in Europe to 14 percent this year and 20 percent in 2013 or 2014.

(Reporting by Hyunjoo Jin; Editing by Dan Lalor)