Cho, speaking in one of his first interviews since becoming president on June 25, offered more details on Toyota's plans to expand manufacturing capacity in North America in about three years. Rather than build a new plant, an idea the company has contemplated, he said Toyota would probably add a second assembly line at its existing plant in Indiana to meet strong consumer demand in the US.

``From my point of view, there is no place more appropriate than Indiana,'' he said, noting the ``high hopes'' residents and workers in Indiana have for a possible expansion. ``If we go elsewhere, it would probably jeopardize the smoothrunning of our existing operations.''

He said Toyota's top executives will make a formal decision on the expansion before the end of the year, including which model to make. A typical Toyota assembly line in North America produces between 1,00,000 and 2,00,000 vehicles a year.

Cho, 62 years old, also said Toyota and Volkswagen may work together to standardize some parts, developing identical components that could be made by the same companies and used in cars sold by both auto makers in different countries.

Toyota's technology division is now looking into ways to standardize key components and evaluating which parts would make good candidates, Cho said. He said the idea was proposed by Volkswagen chief Ferdinand Piech to then-Toyota President Hiroshi Okuda, whom Cho replaced in Toyota's most recent management shuffle. Okuda became Toyota's chairman. ``We're giving a serious consideration on the proposal, striving to investigate what we can do together,'' Cho said.

A Toyota official, who is familiarwith the negotiations but spoke only on the condition he not be named, said the two companies are especially interested in standardizing environmentally-friendly exhaust systems. Toyota has gradually deepened its ties with the German auto maker. In April, Toyota agreed to license to Volkswagen and DaimlerChrysler AG its patented nitrogen-oxide-reduction technology, which is used to purify engine emissions. Volkswagen and Toyota also have an agreement to cooperate on recycling vehicle components, among other things.

Cho said Toyota, as has been expected, will probably move to reorganize its group of affiliates in Japan, including minicar specialist Daihatsu Motor Co and parts supplier Denso Corp, most likely by adopting a Western-style holding-company structure.

One objective behind the reorganization is to better coordinate and streamline research and development efforts, he said. Toyota has to do this ``to beat the deadline for environmental technologies that will define cars of the future,'' Cho said.He said the new structure is part of Toyota's answer to a global consolidation among major auto makers that has created DaimlerChrysler and led to Ford Motor Co's acquisition of the car division of AB Volvo of Sweden.

Cho also said Toyota hopes the new holding-company structure will help provide a kind of ``defense mechanism'' against foreign takeover bids for key suppliers.

While some analysts say Toyota's concerns may be overblown, Cho said corporate Japan's long-standing practice of ``cross-holding'' shares in each other is slowly unraveling and shares could wind up in unfriendly hands. ``We're increasingly thrown into an international scene where corporate ownership changes overnight. We don't mind buying extra insurance policies against them,'' he said.

A third goal of the planned reorganization is to rein in Denso and several other suppliers that have developed strategic components with Toyota and then sold them to Toyota competitors, Cho said.