Toyota's New Entrant to the Rally Market: The 2023 GR Corolla

Blog By: Nate Schaefer

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The all new Toyota GR Corolla, showcased on March 31st, 2022 at the New York Auto Show.  The model shown is the Core edition.

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The reveal trailer for the GR Corolla, showcasing some of the performance and quality drivers can expect if they purchase one.

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GR Corolla Finally Revealed

The reveal of the Toyota GR Corolla in March was a huge surprise to car enthusiasts, as they have been asking Toyota to release a “hot hatch” to the US market for years.  Toyota launched their GR, or Gazoo Racing, line in 2017, which represents their original roots of pushing the threshold and creating superior racing and rally vehicles. The official Gazoo Racing team is a division of Toyota that includes all their racing teams, which means that the company truly is invested in this model by putting this badge on it.  This new Corolla borrows heavily from it’s Japanese-domestic market counterpart, the Toyota GR Yaris hatchback.  Enthusiasts that enjoy tuning and taking their cars to the track have been waiting for Toyota to release a car that appeals to them, and now they only must wait until the end of this year to be able to purchase one.  This car boasts all-wheel-drive, 4 doors, a hatchback, and 300 horsepower from a turbocharged 1.6 liter 3-cylinder engine.  This car will compete directly with rallycross-inspired hatchbacks such as the Subaru WRX and STi, Mini Cooper Clubman S, the VW Golf R, and the Ford Focus RS, all of which offer a manual transmission, turbocharger, and AWD.  Toyota is trying to target both younger and older enthusiasts with this release, but the younger crowd may not be able to foot the bill for a new one just yet.  With an estimated MSRP of $40,000, this car will be exclusively for more mature drivers for at least the first few years of production.  Toyota also understands that they may be limiting their market of potential buyers by only offering the GR Corolla with 6 speed manual transmissions, as fewer drivers know how to drive a manual than in the past.  They feel that this move is the smart one though, as the enthusiast market they are targeting is known to be very vocal about new car releases coming with a 6 speed manual transmission option, and Toyota received a lot of bad publicity when they released their Mk V Supra GR without that manual option.  

With Toyota Motor Company being founded in 1937, their life cycle for efficient and reliable gasoline powered cars is reaching maturity.  The company is now shifting towards new products to appeal to different markets within the automotive industry, with a heavy focus on hybrids and electric vehicles.  It is refreshing to also see a new line of performance vehicles being released under the Toyota badge, as they have been out of the enthusiast car market for almost 20 years.  The new GR line of cars released by Toyota puts them into the growth stage again for performance cars, as they are releasing cars that are appealing to a market of drivers that had not considered new Toyotas as performance options for many years. This example of market penetration will hopefully pay off for Toyota, and they should realize profits from their refreshing, sporty, and competitive vehicle lineup.  The biggest question with this decision is will the market react positively to this release even after the mixed reviews of the Supra, and will it draw drivers of Subarus, Minis, and Volkswagens towards purchasing a new Toyota?

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The VW is the main competitor to the GR Corolla in the hot hatch market, with the WRX providing a competitive sedan option.

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This is an image of an early released GR Corolla Core edition that was tuned by a Japanese shop.  The Japanese editions are set to release Q2 of 2022

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The new Subaru WRX in both Limited (rear) and GT (front) trims.  The WRX is powered by the new 2.4liter turbocharged Boxer-style engine.  The GT model is the highest performance trim offered from factory, but does not include the option for a manual transmission.

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GR Corolla Competition

The main competitor for the 2023 Toyota GR Corolla is the 2022 Subaru WRX.  These two cars are the estimated to be the closest in price and functionality, with the Corolla edging ahead with more stock horsepower and torque. This puts the Subaru at a slight disadvantage, as the Corolla will most likely be faster in a straight line than the WRX, at least on paper.  This is a big factor for consumers when deciding which model they would like to buy; fans of the WRX were let down by Subaru when they released the new WRX that fell short of the predicted and much anticipated 300 horsepower mark.  This could be a good thing for Toyota, as the potential buyers for WRXs may switch over to the Toyota GR Corolla to still get the track features they are looking for, as well as the 300 horsepower they were expecting.  Toyota needs to capitalize on this when they release their model, pricing it very similarly to the WRXs launch price to create a very competitive market for the performance rally-inspired vehicles.  Another potential feature that may win over potential WRX buyers is that the Corolla has adjustable torque split in its AWD system.  This is done with the help of both a front and rear limited slip differential (LSD), which allows the driver to change the percentage of torque to the front and rear. This feature is not found on the WRX and will likely help the Corolla overtake the Subaru in cornering and on gravel; the WRX does have a lower center of gravity, stiffer suspension, and better aerodynamics, but only time will tell if these differences outpace the Corolla when they are both released and tested side by side on multiple tracks and terrains.  

The WRX has been the industry leader in rally-inspired sedans and hatchbacks for the better half of the last 20 years, and Subaru has generated a huge following of loyal customers that support the brand.  The newest release was less than stellar in terms of fan support, as the higher end model, the WRX STi, was cancelled this year.  This decision was a huge letdown for Subaru fans around the world, as Subaru announced they are starting to phase out their performance gas powered cars for electric cars.  The Subaru WRX was first brought to the US domestic market in 2002, and it has been made extremely popular because of its early success in World Rally Championship (WRC) and in enthusiast markets in Europe and Japan.  Public opinion has changed throughout the years since then, as the multiple generations of the WRX are liked by some and hated by others in the community.  The latest generation’s release was generally disliked by most current followers of the brand, and the numbers that they released with the newly designed engine were lackluster.  This shows that the Subaru WRX is in its maturity stage.  Customers are getting tired of the same numbers for speed and torque through multiple generations of the car, and the sales are starting to diminish for new models.  Tuners and enthusiasts would rather buy an older model and create their own build from it than buy a new model from the manufacturer.  This type of driver could be considered as someone who falls into the Pursuit of Preloved consumer category, as they seek out an older model vehicle and build it to meet their needs or specifications.  Toyota has the opportunity to pull these customers over to their side by offering a very similar, and in some respects better, car that meets the benchmarks that Subaru owners would like to see from their current brand.  Hopefully the tuner market will see aftermarket support start to trickle into the market shortly after the launch, and they can begin to tune these cars to their full potential. The biggest question posed currently for Subaru is did they make the right choice by cutting the STi from production to focus on electric vehicles, and will they see a loss of customers because of it?  And will their be enough aftermarket support for the GR Corollas to keep up with the dominating aftermarket for Subarus?

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The Circuit edition GR Corolla will only come in this matte grey color and will include a carbon fiber roof, rear spoiler, and hood.  

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The interior of the GR Corolla Circuit edition, with larger infotainment center, Alcan tera seats, and  more options that will increase performance on the road and on the track.

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GR Corolla Scarcity

Toyota knows that the launch of the GR Corolla will be popular within the industry, and they are artificially constraining the supply to drive up the hype (and price) of the release of the Core model later this year and the Circuit model early 2023.  Jonathan Ramsey of autoblog.com states that “Toyota said that artisans at the Motomachi plant will hand-build 8,600 GR Corollas for global consumption.  The US markets will get 5,100 units of the 2022 GR Corolla Core, 1,500 units of the GR Corolla Circuit Edition. The rest of the world fights for the remaining 2,000 units” (Ramsey).  This means that of the 1,270 licensed Toyota dealerships in the US, each should in theory get 3 Core models and 1 Circuit model.  Toyota is predicting these low numbers will drive up dealer prices significantly due to the scarcity, meaning these cars will likely sell for well over MSRP. The fact that the Circuit edition is a one-off model for 2023 and no more than 1,500 will be brought to the US means that the price of them is going to be outrageous.  With so many orders across the country being filled for the Core and Circuit models, Toyota knows that the demand is high for these limited production cars.  The novelty of limited production cars has become a model to follow in the current market, as many car companies seem to be successful with releasing small batches of limited-edition cars and trucks.  For example, Ram released the TRX variant of the Ram 1500, a performance truck that sold very well in small, released batches.  While Ram is still producing the TRX, Toyota will not be producing any more of the Circuit editions, which makes them a very hot commodity.  

This model of artificial scarcity was analyzed in case studies done on luxury brands such as Supreme, who chooses to only produce a certain amount of an item to drive up demand and price.  Toyota may have analyzed the effectiveness of the scarcity model of Supreme and used it to their advantage.  While most vehicles depreciate after they are pulled off the dealer’s lot by a new customer, special edition vehicles, especially in such small numbers, tend to appreciate greatly and are even seen as a long-term investment by some car collectors.  The Circuit edition GR Corolla will no doubt fall into this category, as there will only ever be 1,500 of them inside the US.  Toyota has said that the Core model will remain in production through 2023 but will still be released in small batches.  What Toyota will have to decide is the number of Cores they want to release each year to maintain novelty status, and if they want to work on any other special editions that would be like the Circuit model.  The question I pose to the reader is this, would you consider paying considerably higher than MSRP for the more rare and collectible Circuit GR Corolla, or would you buy a Core model at the lower price and sacrifice the limited-edition status?  If someone were to buy the Circuit edition, do you think they would enjoy it as much as they would a Core model, or would they want to keep it off the road to protect their investment?