Toyota Motor and Mazda Motor are reported to undergo a deal according to which, Japan's largest automaker will supply its hybrid technology under license to Mazda.

The car is revealed to be sold only in Japan initially, although Mazda said it hoped eventually to launch it in overseas markets as well.

Hybrid cars are basically energy efficient cars, which work by twinning internal combustion engines with electric motors, and are seen as quite significant for automakers to grab robust sales in the coming years as governments introduce stricter environmental regulations.

"Hybrids are spreading fast in Japan, and launching a model in the domestic market has become an urgent task", Mazda Executive Vice President Masaharu Yamaki told a joint news conference in Tokyo.

Specialized parts to be used are expected to be delivered by Toyota-affiliated component makers such as Denso, Japan's biggest car-parts company.

Takeshi Uchiyamada, Toyota's Executive Vice-President, posted that the Mazda deal would prove to be a huge support to lower production costs for Toyota's own hybrid cars by widening the market for shared components.