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RIO DE JANEIRO (Reuters) -- Toyota plans to build a new car plant in Brazil's Sao Paulo state worth more than $1 billion, Brazilian business newspaper Valor Economico said on Thursday.

Valor said Toyota's second car plant in Brazil should be ready around 2010 and would produce over 200,000 small economy cars per year as well as engines.

Last month, a Toyota spokesman confirmed the company was considering setting up a new plant to build low-cost cars in Latin America's largest country, but said the company had not decided on details such as the location or timing of the move.

Valor said the company was still deciding on what car model to produce at the factory. Toyota is already producing its Corolla model at a plant in the interior of Sao Paulo -- Brazil's wealthiest and densely industrial state.

Brazil's car market, particularly for popular low-cost automobiles, is dominated by foreign automakers like Fiat, Ford Motor, General Motors and Volkswagen, which have local plants.

A range of other foreign companies have set up factories in Brazil over the past decade, but they mostly focus on the more expensive car segment.