In a world of electric cars and crossover SUVs, it can feel like there's no place left for a small sporty performance car. Toyota is laughing at that idea because the automaker has just launched an all-new Gazoo Racing model. Say hello to the first-ever GR Corolla, a 300 hp, all-wheel-drive compact hatchback.

Starting with its best-selling car, Toyota has stretched the Corolla's wheel arches out. It has fitted a double-wishbone rear suspension along with all-wheel drive. And Toyota has taken the fire-breathing 1.6L triple from the GR Yaris and turned up the wick. All to create the most intriguing sport compact to hit the market in more than a decade.

Toyota launched the 12th generation Toyota Corolla in 2018. The model was built on the automaker's TNGA platform, which helped transform the compact into a car that drove as sharply as the styling suggested. It helped mark Toyota's return to building driver's cars, a segment of car buyers it had seemed to move away from in recent years.

In place of the 1.8L and 2.0L fours offered in standard Corollas, Gazoo Racing has snagged the 1.6L turbocharged three-cylinder that debuted in the GR Yaris sold elsewhere in the world. Badged G16E-GTS, the compact engine is modified even further for the GR Corolla. Multiple oil jets cool the pistons, the exhaust valves grow in diameter, and GR has even machined part of the intake port on each cylinder to help flow more air.

Thundering Three Cylinder

Combine those changes with a new three-piece muffler that lowers backpressure in the system and the total output is 300 hp and 273 lb-ft of torque. That is 43 horsepower and up to seven lb-ft more than offered in the Yaris and a whopping 131 hp more than a Corolla SE can muster.

Staying true to its enthusiast target audience, Toyota will offer the GR Corolla with just one transmission: A six-speed intelligent manual transmission that will offer rev-matching and can handle the increased torque the 1.6L engine can produce.

The 1.6L turbocharged engine is paired with the GR Four all-wheel-drive system. The rally-developed system can be controlled by the driver to split the power 60-40 between front and rear, 50-50, or a slide-friendly 30-70 front-rear split.

Upgrades All Around

Toyota has widened the GR Corolla by 2.9 inches over the standard car. The wider stance allows a wider track for stability. It also lets Gazoo Racing stuff 235/40R18 Michelin Pilot Sport 4 tires mounted to 15-spoke gloss-black alloy wheels onto the car to give it enough traction to match the engine's capabilities. GR-Four-stamped side skirts bridge the gap between the wheels and look extra cool.

Braking is handled by large 14-inch front rotors (11.7 at the back) clamped by four-piston fixed calipers up front (two-piston fixed calipers rear). Helping drivers use all of the performance, the GR Corolla will come with a 1-year complimentary membership to the National Auto Sport Association that includes a High-Performance Driving Event with expert instruction.

The GR Corolla has been stiffened significantly compared with its standard counterpart. More weld points in the frame of the vehicle, particularly at joints, take care of that. Using more structural adhesives also increases the rigidity of the chassis to let the suspension do its work.

With a double-wishbone suspension setup in the rear and MacPherson-type struts up front, the GR Corolla uses springs, shocks, and sway bars that have been tuned on the track to deliver optimal handling and to help make the car more fun to drive. There are enough changes to the fabric of the car that Toyota builds them on a new dedicated GR production facility. The cars are largely hand built, taking longer to complete than a standard Corolla.

Driver Focused Interior

Inside, the GR Corolla will have a pair of fabric-trimmed sports seats with grey stitching and GR-badged headrests. The shift lever is a short-throw unit, and Toyota has fitted a pull-type mechanical parking brake in place of an electronic actuator found in other models. The driver gets a 12.3-inch Multi-Information Display that includes GR meter with 4WD mode, boost gauge, and tachometer to keep them informed of what that car is doing.

The GR Corolla will also launch Toyota's all-new infotainment system for the Corolla line. The new system, which first arrived in the 2022 Tundra pickup, offers Google POI data, "Hey, Toyota" voice control, and has wireless versions of Apple CarPlay and Android Auto standard.

That interior describes one of two trim levels the GR Corolla will offer, badged Core. A Circuit edition will be offered only in the car's launch year and is loaded with extras.

Circuit Model

The first feature you'll notice on the Circuit model is the forged carbon fiber roof, or maybe the vented bulge hood or the rear spoiler. Inside, the Circuit gets Brin Naub suede and synthetic leather trimming for its sports seats. There will also be red stitching on the seats, red mesh inserts, and the Circuit Edition's shift knob will have a Morizo signature. That's the name company boss Akio Toyota used when he wanted to go racing on the DL.

Circuit Edition is more than just cosmetics, though. It will have Torsen limited-slip differentials on both front and rear axles (these will be an option on Core). The brakes are the same, but get red calipers with GR logos. It will also have heated seats and a heated wheel, which might not make you faster, but will make you feel more comfortable when you're going quickly.

Last, but certainly not least, the GR Corolla will have Toyota Safety Sense 3.0 as standard. With improved system sensors, the latest version of TSS adds motorcycle and guardrail detection to Pre-Collision System with Pedestrian Detection. Lane Departure Alert's lane recognition has also been improved, and Toyota's Rear Seat Reminder will be standard.

The 2023 Toyota GR Corolla goes on sale later this year.