Toyota introduced the eighth generation of the Corolla in 1995 and planed a refresh for the lineup in 1999, and the wagon received some updates as well.
Apart from the Ford F-150 pickup, the Corolla was the best-selling car globally. Toyota didn't want to give up that crown and had to adapt and constantly change, like on the eighth generation. It developed the new vehicle on the older platform due to the 1990 economic recession that affected the U.S. market, which was the largest car market globally. But customers didn't notice that, and the sales were good. As usual, four years after the launch, the car went through a facelift that brought more appeal for the range.
The wagon was heavily improved and received the same front fascia as the sedan. Before that, it shared the headlights and grille with the three-door hatchback, which was not the best design in its family. Toyota's designers installed the dual headlamps under the same clear lens, and they also moved the badge from the hood to the newly designed grille.
Inside, the designers changed the dashboard completely. They installed a small LCD on top of the center stack and buttons around it. It was used for the audio system as an ancestor for the infotainment systems. The instrument panel was different, depending on the engine option, with or without a tachometer. Like its non-facelifted version, the size could vary between 308 liters (10.9 cu-ft) and 1218 liters (43 cu-ft), thanks to the split-folding rear bench.
Under the hood, Toyota installed a small range of engines consisting of a 1.6-liter gasoline unit and two diesel versions: a 1.9-liter carried over from Peugeot-Citroen, and a 2.0-liter turbo-diesel developed in-house.