Toyota Motor Corp plans to introduce a start-to-finish manufacturing system for midsize hybrid vehicles made by a Kyushu subsidiary to meet growing consumer demand for hybrids, the Nikkei business daily reported.

Toyota Motor Kyushu Inc is an integrated producer of certain Lexus models and other large vehicles, mainly for export to North America, Nikkei said.

But for the SAI and HS250h hybrids, Kyushu currently uses engines made and shipped from its parent's Kamigo plant, the daily said.

The company also plans to implement an integrated production model for hybrids at a factory in the Tohoku region starting late next year, the business daily reported.

The Nikkei said Toyota will invest around 1 billion yen to retool an idle engine assembly line at Kyushu's Kanda plant, the paper said.

By the middle of 2012, the overhauled line will take over the assembly of 2.4- and 1.8-liter engines for hybrid cars, currently handled at the Kamigo facility, Nikkei said.

The capacity of the new line is expected to be around 150,000 engines a year, the paper reported.

(Reporting by Swati Chitnis in Bangalore)