Although the Toyota Corolla is one of the world’s bestselling automotive nameplates, it’s not one that generally arouses much enthusiast interest. Twenty years ago, however, the Corolla Levin coupe and its near-twin, the Sprinter Trueno, were sporty rear-wheel-drive cars that are still coveted by street racers today. We’ll get to the legendary AE86 in part two. In this installment of Ate Up With Motor, we examine the history of the early DOHC Corolla and Sprinter coupes, their Yamaha-developed 2T-G engine, and the more mundane cars on which they were based.

THE FIRST COROLLA

The Toyota Corolla has been so long established as the definitive reliable-but-dull automotive appliance that it might seem hard to believe that when it first debuted back in 1966, Toyota pitched the Corolla as something of a sporty car.

That’s not to say the original KE10 Corolla 1100 was a sports car; there was nothing particularly exotic about its performance or specifications, although an 11th-hour decision to expand engine displacement to 1,077 cc (66 cu. in.) gave the Corolla a commercially useful edge of 89 cc (5 cu. in.) and about 4 PS (3 kW) over the new Datsun B10 Sunny. Rather, the Corolla was sporty in the way a contemporary six-cylinder Ford Mustang was sporty: There were standard bucket seats, the shifter for the four-speed transmission was on the floor rather than the steering column, and the sparse instrumentation was set into round pods — little touches that made the Corolla feel like more than mere basic transportation.

Toyota had already tried the basic transportation approach with the UP10 Publica, launched in 1961 in response to a proposal from the Ministry of International Trade and Industry (MITI) for a low-cost “people’s car” to put Japan on wheels. The Publica quickly demonstrated that lower prices did not necessarily translate into huge sales. It was not a complete commercial disaster, but neither was it the breakout hit for which Toyota had hoped. The UP10 wasn’t a bad car for what it was, but anyone who could afford better wasn’t likely to give it a second thought, which also limited the Publica’s aspirational appeal for less affluent buyers. Toyota tried to add some interest with a convertible version and the peculiar-looking Sports 800 derivative, but neither had much impact.

Still searching for the optimum balance between affordability and desirability, Toyota developed the Corolla as a follow-on to the Publica. The new model was positioned as a somewhat larger and more upscale product, albeit smaller, cheaper, and more economical than Toyota’s contemporary Toyopet Corona.

The first Corolla 1100 sedan was fairly straightforward, offering one engine, one body style (a two-door sedan), and three trim levels with prices ranging from ¥438,000 to ¥495,000 ($1,215 to $1,375 at the contemporary exchange rate). However, Toyota wasted little time adding additional body styles, more trim levels, and options like front disc brakes and two-speed Toyoglide automatic. Before long, there were also more powerful engines — up to 77 PS (57 kW) from the dual-carburetor 1,166 cc (71 cu. in.) 3K-B, added late in the model run.

All this was a huge financial gamble for Toyota, involving the construction of two entirely new factories, but the bet paid off. Unlike the Publica, the first Corolla was a breakout success, for a time becoming Japan’s bestselling car. It briefly lost that title to the new Toyopet Corona Mark II in 1968, but regained the lead in 1969 and held it for more than 30 years.

A few Corollas made their way overseas almost from the beginning, but Corolla exports began in earnest in early 1968, with both complete cars and CKD (complete knocked down) kits for local assembly in markets like Australia and New Zealand. The Corolla began arriving in English-speaking markets that spring, with a low starting price (under $1,700 in the U.S.) and generally positive reviews.

By contemporary small-car standards, the Corolla’s ride and handling were no better than average, particularly with bias-ply tires, and there was no great abundance of head or leg room for the long of leg. However, performance was decent (top speed was about 85 mph — 135 km/h), fuel economy was excellent, detail finish and assembly quality were quite good, and the price was right. That was an agreeable compromise for many buyers, particularly since the Corolla soon developed a commendable record for mechanical reliability (albeit not corrosion resistance).

In all, Toyota sold nearly a million KE10 Corollas in less than four years, an annual average that wasn’t far from the total of all Japanese passenger car production when the Corolla was first conceived in 1963. It was a sign of things to come.

DEALER CHANNELS

For what happened next to make sense, it’s necessary to first examine one of the more unusual aspects of Toyota’s Japanese domestic market (JDM) business: its multiple dealer networks.

Our American and British readers are accustomed to automakers having multiple brands with separate dealer networks. Many of these are legacies of past mergers and acquisitions by previously independent automakers while others, like Honda’s North America-only Acura brand, are attempts to branch out into new market segments. Toyota’s home-market sales channels evolved in quite a different way, stemming from the unique circumstances of the postwar Japanese auto business.

The market for passenger cars in Japan evolved quite slowly compared to many other nations. Although the first completely Japanese-made automobile was built in 1904, until the late 1950s, passenger cars represented a very small percentage of the domestic auto industry. Consequently, until the fifties, Japan had few automotive dealerships and most of their business was in truck sales to commercial buyers.

During World War II, the Japanese government not only imposed controls on car and truck production, but actually went so far as to consolidate all automotive distribution into a single national chain not bounded by any one brand or manufacturer affiliation. After the Japanese surrender, the Allied occupation force, keen to break prewar monopolies, quickly did away with this central organization, leaving individual dealers to fend for themselves.

Seeing an obvious opportunity, Toyota sales boss Shotaro Kamiya scrambled to sign as many of those newly independent dealerships as he could, including some previously affiliated with other makes. His recruitment drive gave Toyota the largest postwar sales network in Japan, although that still didn’t amount to very many dealers: fewer than 50 nationwide (albeit many with multiple outlets). Initially, that was hardly a problem, since materials were in short supply and most production was still restricted to trucks; the General Headquarters of the Allied Powers finally lifted the restrictions on passenger car production in late 1949. Toyota was struggling, and only survived 1949–1950 through the intervention of the Bank of Japan and a painful downsizing.

By the mid-fifties, the worst was over and Toyota was growing rapidly. As the company prepared to shift focus to passenger cars and light commercial vehicles, however, it quickly became clear that significantly expanding sales would require additional retail outlets. The dilemma was that Kamiya’s postwar dealer recruitment drive had given each of Toyota’s existing franchise holders exclusive distribution rights over very large territories, in some cases encompassing entire prefectures.

Kamiya’s eventual solution was to establish new sales channels that could sell their own franchises. The first of these new channels, established in 1956, was called Toyopet, followed about a year later by Toyota Diesel. In 1961, these were joined by an additional channel selling the new Publica (and, five years later, the Corolla).

As you might imagine, Toyota’s existing franchise holders were none too happy about the idea of new Toyota stores within existing sales territories. Kamiya managed to placate the dealers by allowing them to purchase minority interests in the new stores, giving established retailers the opportunity to profit from the additional outlets, but not absorb them. In later years, there would also be an effort to limit model overlap so as to minimize direct competition between stores, although in the early days, Toyota and Toyopet Stores sold many of the same products.

The multiple channels were not a GM-style hierarchy and, unlike the company’s later Lexus and Scion divisions, did not necessarily reflect different branding. The Toyopet name, for example, had existed well before the first Toyopet dealerships and both Toyota and Toyopet Stores sold Toyopet-branded cars and trucks until Toyota phased out that brand in the late seventies. Beginning with the launch of the Publica in 1961, Toyota did to some extent use the separate channels as a way of targeting different buyer demographics, but the principal goal was simply to increase sales volume by allowing Toyota to first double and then triple its dealer base.

If you’re not confused already, we should add that during this period, Toyota’s sales organization was actually a separate company, Toyota Motor Sales Co., Ltd., of which Kamiya was president. The sales organization had been spun off at the insistence of the banks during Toyota’s 1950 reorganization; the rationale is cryptic, but we assume the goal was to enable Toyota’s valuable dealer network to survive even if the struggling manufacturing business did not. Toyota Motor Company and Toyota Motor Sales were not formally reunited until 1982, spending the intervening 32 years in what former Toyota president Eiji Toyoda later characterized as an interdependent but often contentious relationship.