The Toyota C-HR is a concept version of a new small crossover SUV that is expected to arrive in the U.S. by 2018. Image source: Toyota

Toyota (TM 0.05%) said on Thursday that a new small crossover based on its radical-looking C-HR concept will go into production -- at least in Europe.

What Toyota said: Toyota confirmed that a production version of the C-HR will be manufactured at a factory in Turkey for the European market. It will use a hybrid drivetrain built at a Toyota engine factory in Wales.

It's expected that the same vehicle will be sold in the U.S. starting in 2017. A production version had been expected here as a Scion-brand entry, but Toyota has since announced that the Scion brand will be discontinued and its planned future products will be released in the U.S. under the Toyota brand.

What the C-HR is: It's a "concept" version of a crossover SUV that's one size smaller than Toyota's popular RAV4. "Concept" in this case means that its design as shown last fall wasn't yet finalized for production. Toyota said that it will unveil the production version at the Geneva Motor Show in March. It isn't yet clear whether the production model will retain the "C-HR" name.

Whatever it's called, that production version is expected to look a lot like the vehicle you see in the photos here, which was shown last fall at the Frankfurt Motor Show. It's an evolution of the original C-HR Concept, first shown in Paris in the fall of 2014.

Another view of the C-HR concept. Image source: Toyota

Like Toyota's new-for-2016 Prius, the new crossover will be built on the Toyota New Global Architecture, or "TNGA." TNGA is an extremely flexible vehicle architecture that was designed to reduce the number of different vehicle architectures that Toyota uses around the world, in turn reducing Toyota's engineering costs, simplifying its manufacturing, and increasing its economies of scale.

Why the C-HR important for Toyota: Clearly, given its show history, Toyota is aiming first and foremost to make a big splash with the small crossover in Europe.

Compact and subcompact crossovers have been big sellers in Europe over the last couple of years. General Motors' (GM 4.37%) Opel Mokka, a near-twin of the Buick Encore sold here, has been one of the hottest sellers in the segment. Ford's (F 0.47%) Fiesta-based EcoSport crossover has also done well in Europe recently.

But it's likely to be important in other markets around the world too, as similarly sized rivals are already selling well elsewhere. Honda's (HMC 0.09%) HR-V is seeing growing sales in the U.S., as well as in Japan and China (where it's known as the Honda Vezel). GM is having success with with the Chevy Trax and Buick Encore in both the U.S. and China, and Ford is expected to launch a revamped EcoSport (perhaps under another name) here in the U.S. sometime in the next few years. 

For investors, it's a good thing: Toyota's sedans have been losing sales to crossover SUVs -- and not all of those SUVs have been Toyotas. A new small crossover should help Toyota keep more of those buyers in its showrooms.

What's next for Toyota: The company will reveal the production version of the C-HR next month. It's likely to announce its production plans for the U.S. and other global markets at the same time, or shortly thereafter.