The relative maturity of the North American, European and Japanese markets are forcing Toyota Motor Corp. to look elsewhere for growth and in particular, emerging markets such as Brazil, China and India.
"Particularly in the Southeast Asian region, Volkswagen and others are looking to challenge our lead so we can't be resting on our laurels," he added.
Toyota said that the upcoming compact models will carry a base sticker of around 1 million yen (about US$12,500 / €10,000) or higher, with production to be localized in markets such as India, Brazil and China.
Asked about rumors concerning the development of a lower cost model priced around 500,000 yen (roughly US$6300 / €5,000) for India, Funo told reporters that the company has no such plans.
"We won't go to the 500,000 yen segment - it's not our category," he said. "We want to beef up our presence in segments where we can be competitive. There are many other options for customers looking in that price range, including used cars."
At last month's Auto China 2012 in Beijing, Toyota showed three compact concept models that may preview some of the vehicles it is preparing for emerging markets.