Toyota Motor's new chief executive, a racing enthusiast and self-described "car nut," hopes an affordable sports car will inject more fun into the company's lineup and get it back on the road to recovery.

During a speech at an auto industry conference in northern Michigan--his first appearance in the U.S. since taking the reins in June of the company his grandfather founded--Akio Toyoda provided few details about the planned sports car other than to say he intends to "fast-track" it. Later, James Lentz, president of Toyota Motor Sales USA, confirmed the car is being developed with Subaru, the auto division of Fuji Heavy Industries, but declined to say whether it'll be sold under the Toyota or Scion brand.

Toyoda said he plans to return the company to its roots--making high-quality, affordable vehicles--but he wants to see Toyota build cars that are more fun and exciting to drive.br>
Like other automakers, Toyota is coping with losses amid a sharp decline in sales. But after substantial cost cuts, Toyota earlier this week reported a smaller-than-expected loss of 77.82 billion yen ($819 million) for the latest quarter and said it expects less red ink for the full year to March 2010 than initially projected.

While Toyoda said he's confident the U.S. market will recover, he said the industry is facing much bigger challenges that go beyond the economic slowdown. "I see an auto industry set to make its biggest transformation in 100 years," he said.

Just as in the early days of the industry, when many technologies competed to power the automobile, automakers today are racing to develop new power trains to reduce oil use. "We are back where we began 100 years ago ... at a point where we must reinvent the automobile," he said.

While hybrids like the Prius will remain Toyota's core technology, the company is pursuing other alternative fuel projects, including plug-in hybrids, battery-powered cars and hydrogen fuel cells, he said.

"We are proceeding on all these fronts because there is no one solution for future needs," he said, noting that different markets may require different types of vehicles.