Toyota Motor Corp. began selling its smallest hybrid car in Japan Monday to compete with Honda Motor Co. for younger consumers seeking entry-level fuel-efficient vehicles.

Prices for the Aqua compact hybrid, to be marketed as the Prius C in the United States, will start at ¥1.69 million, the automaker said Monday in a statement. The company aims to sell 12,000 Aquas a month in its home market.

Toyota is counting on gasoline-electric models, led by an expanded Prius lineup, to meet a goal of increasing global vehicle sales 20 percent next year. Honda's Fit compact, sold in hybrid and conventional gasoline-engine versions, outsold the larger Prius in the first six months of this year in Japan, underscoring consumer demand for smaller fuel-efficient cars.