Toyota Motor is introducing a new Land Cruiser, the smallest model in its line-up, as Chinese automakers expand their presence across Asia.

The Land Cruiser FJ is exceeding Toyota's sales target in Japan and has also recorded sales in overseas markets, said Masaya Uchiyama, the model's chief engineer. The SUV is priced from around JPY 4.5 million (US$ 28,460) and was developed in response to customer demand for a smaller Land Cruiser suited to Asia's often narrow roads.

"We're trying to reach people who may previously have avoided the Land Cruiser because of its size," Uchiyama told reporters in Toyota City, Japan.

The FJ made its debut in March in Thailand, where it is manufactured, beginning sales in the South-East Asian region. South-East Asia has seen increased competition from Chinese brands, led by BYD Co., which are expanding in the region with electric vehicles at lower price points.

South-East Asia is among the world's fastest-growing car markets and has been a manufacturing base for Toyota and Honda Motor for decades. China's export expansion is changing the competitive environment in the region. In Thailand, Chinese brands, supported by EV subsidies and low tariffs, have expanded to account for nearly 30% of the country's car sales, up from 4% five years ago.

"The Chinese are producing SUVs and incorporating technology that's very impressive," Uchiyama said. While Toyota is monitoring developments, he said the Land Cruiser line has a focus on reliability and durability.

Shorter and narrower than its three larger Land Cruiser siblings, the FJ is powered by a 165 PS engine and features driver-assistance systems, including one that helps the vehicle manage steep descents without locking the tyres.

During a recent test drive at an off-road course in Toyota City, the SUV was driven over steep climbs, rocky terrain and large potholes. Its hydraulic steering required greater effort to make tight turns than the larger Land Cruiser models and provided more immediate road feedback.

The FJ "could be an important model in South-East Asia because it can make the Land Cruiser brand more accessible to a wider range of customers," said a market analyst. Its smaller size "should also be an advantage for daily use in cities, while keeping good off-road capability."

The compact SUV competes with models including the five-door variant of Suzuki Motor's Jimny, which is priced from around JPY 2.9 million.

In Thailand, where Toyota has been the leading carmaker for decades, Chinese brands such as Chery, Jaecoo and MG are expanding with lower-priced models. Chery's V23, a boxy electric SUV with a retro design, is priced from around THB 700,000 (US$ 20,795), compared with the FJ's price of THB 1.3 million.

Toyota's Japanese rival Mitsubishi Motors, meanwhile, is reviving the Pajero after ending production of its flagship SUV in 2021. Although Mitsubishi has not yet disclosed pricing, the model would likely compete with the Land Cruiser 300, the largest and most powerful model in the line-up, which starts at around JPY 6.3 million in Japan.

The Land Cruiser has a 75-year history of use as a work vehicle. A Land Cruiser predecessor from the 1950s was the first vehicle to climb to the sixth station of Mount Fuji, while subsequent versions have been used for applications including ambulances, fire trucks and safari tour vehicles.

The new FJ is aimed at a different customer base as SUVs become more common among urban drivers. In addition to Japan and South-East Asia, Toyota anticipates demand for the model in Africa and the Middle East.

"We plan to introduce it in all markets where it makes sense to have a more compact Land Cruiser," Uchiyama said.