Mazda will manufacture a Mazda2-based subcompact vehicle for Toyota and according to a new report, the Toyota will most likely use Mazda's fuel-efficient Skyactiv engine.

The CEO of Mazda’s operations in Mexico, Keishi Egawa, said the Toyota-branded vehicle will get the high-compression, direct-injected Skyactiv gasoline engine.

“They will make model-specific investment for the Toyota vehicle. Stamping, dies - that is theirs, as well as some of the interior design work,” Egawa was quoted as saying by AutoNews. But the Toyota spinoff will use “our engine,” he added.

Thanks to the Skyactiv engine, the Yaris replacement model would be one of only a few direct-injection engines at Toyota.