What's New?
Not much for the 2007 model year, although a redesigned version of the Corolla is expected to be introduced later in the year as a 2008 model. But for now, the only significant change is that the sporty, 170-hp Corolla XRS model has been dropped.

Overview
Few compact cars have as long a history as the Corolla. When it made its American debut in 1968, its primary competitor was the Volkswagen Beetle; cars like the Honda Civic and VW Rabbit were still years away. Originally a rear-wheel-drive sedan, the Corolla changed to front-wheel drive in the 1980s. Over the years, the Corolla has been produced in sport coupe, hatchback, and wagon versions, though the sedan has been the mainstay of U.S. sales.

The current Corolla sedan, which was redesigned in 2003, occupies a space in the Toyota lineup above the entry-level Yaris and below the Camry mid-size sedan. Available in CE, LE, and S trim levels, all Corolla models include air conditioning and a CD player. The sporty S trim adds an aerodynamic body kit, snazzier interior trim, wider tires, and power door locks. The LE shuns the sporty trim but adds power windows and mirrors, remote keyless entry, wood interior trim, and electroluminescent gauges. Anti-lock brakes are optional on all models; seat-mounted side air bags and electronic stability control are optional on S and LE trims—the latter only with the automatic transmission. Now that the XRS is gone, all Corollas are powered by a 126-hp, 1.8-liter engine with variable valve timing, which drives the front wheels through either a 5-speed manual or 4-speed automatic transmission.

Toyota introduced new versions of the Corolla in Japan and Europe in late 2006 as 2007 models. The new Corolla is expected to debut in North America in 2007 as a 2008 model.

The Competition
The Toyota Corolla competes in the Compact Conventional segment, which consists of 20 models. Buyers in this segment look for fuel economy, reliability, and safety, according to the J.D. Power and Associates 2006 Avoider Study^SM and the Escaped Shopper Study.^SM

The top sellers in the segment during calendar year 2006, according to the J.D. Power and Associates Sales Report,^SM were the Toyota Corolla (328,699 units sold), Honda Civic (316,638), and Chevrolet Cobalt (211,449). The Toyota Corolla’s 328,699 sales in 2006 represent an increase of 18.6 percent compared to the previous year. Other models offered in the Compact Conventional segment include the Ford Focus, Nissan Sentra, Toyota Prius, Volkswagen Jetta, and Saturn Ion. Joining the segment in 2007 are the Pontiac G5, Suzuki SX4 , and Volkswagen Rabbit .