A baby robot designed to “invoke an emotional connection” has been unveiled in Japan, where plummeting birth rates have left many couples without children.

The Kirobo Mini was created by Toyota’s non-automotive department and is equiped with artificial intelligence and a camera so it can recognise the face of the person speaking to it and respond.

“He wobbles a bit, and this is meant to emulate a seated baby which hasn’t fully developed the skills to balance itself,” said Fuminori Kataoka, Kirobo Mini’s chief design engineer. “This vulnerability is meant to invoke an emotional connection.”

Toyota plans to sell Kirobo Mini, which blinks its eyes and speaks with a baby-like high-pitched voice, for 39,800 yen (£300/US$390) in Japan next year. It comes with a “cradle” that doubles as its baby seat designed to fit in car cup holders.

The baby automaton joins a growing list of companion robots, such as the upcoming Jibo – designed by robotics experts at the Massachusetts Institute of Technology and resembling a swivelling lamp – and Paro, a robot baby seal marketed by Japanese company Intelligent System as a therapeutic machine to soothe elderly dementia sufferers. Around a quarter of Japan’s population is over 65 with a dearth of care workers putting a strain on social services.

Exacerbated by a reluctance to invite immigrants to bolster its working-age population, Japan’s demographic slowdown shows little sign of easing.

The Kirobo Mini is capable of having casual conversations and can react to user emotions. Photograph: Franck Robichon/EPA

In the past half-century births in Japan have halved to around a million a year, according to government statistics, with one in 10 women never marrying. Births out of wedlock are frowned upon in Japan and much less common than in western developed nations.

Japan is a leading user of industrial robots. It has the second-biggest concentration after South Korea, with 314 machines per 100,000 employees, according to the International Federation of Robots. New technology to help robots better interact with humans means they have begun moving beyond factory floors into homes, offices, shops and hospitals.

Kataoka said Toyota, which is investing heavily to develop artificial intelligence for self-driving cars, saw Kirobo Mini as a stepping stone to more advanced robots that would be able to recognise and react to human emotions.