Toyota Motor Corp. said Thursday it will start selling the hybrid Prius and two other models in South Korea next year as it expands its offerings in the country beyond the luxury Lexus brand.

“It’s a big challenge for Toyota,” Chairman Fujio Cho told reporters of the decision by Japan’s biggest automaker to enter the South Korean market under the Toyota brand. “It’s pretty tough,” Cho said of the South Korean market.

Toyota said it will begin to set up a dealer network and start selling the Prius, the Camry sedan in gas and hybrid versions, and the RAV4, a compact sport utility vehicle, during the second half of next year.

The world’s largest automaker by production has set modest sales goals. It is initially targeting a total of 500 vehicles a month in a market dominated by domestic manufacturers including Hyundai Motor Co. and Kia Motors Corp., the two largest makers.

Toyota has already had success with the Lexus, which it began selling in South Korea in 2001. Sales have risen every year, with 2007 the best to date with 7,520 vehicles sold.

That accounted for 14.1 percent of the imported car market, just behind Germany’s BMW AG at 14.3 percent, according to figures from the Korea Automobile Importers & Distributors Association.

Japan’s Nissan Motor Co., which markets its luxury Infiniti brand in South Korea, also plans to begin sales under the Nissan brand later this year. Mitsubishi Motors Corp. plans to enter the market as well.

Honda Motor Co. sold 7,109 vehicles in South Korea last year, the third-largest total for foreign automakers.

Toyota manufactured a record 9,497,754 vehicles worldwide in 2007, up 5.3 percent from the previous year, beating General Motors Corp., which made 9.284 million.

Toyota, however, sold about 3,000 few vehicles than its U.S. rival, which has been the world’s top seller for 77 years.