Successive models attached more mechanical hardware to improve driving response and occupant safety. With the fourth generational design of 1991, Tercel has improved much in terms of its driving attitude and even its stock of standard comfort fittings. Toyota's smallest front-drive subcompact was redesigned for '91, and returned slightly roomier and more powerful than the car it replaced. A 2-door notchback was offered, but a 4-door sedan took the place of the previous year's 2-door hatchback.

 Wheelbase remained at 93.7 inches, but the 161.8-inch overall length fell between the prior year's 2-door, which was 4.5 inches longer, and the hatchback, which was five inches shorter. Two-door models came in base and deluxe trim; the 4-door was offered in Deluxe (DX) and LE form. All used an updated version of the previous 1.5-liter 4-cylinder engine.

A 4-speed manual was the only transmission offered on the base model; the others had a 5-speed manual standard and a 3-speed automatic optional. By 1994, after 1.5 million sales from 15 annual models, Tercel had acquired a reputation not only for low prices but the quality of its components and the way all parts fit together to form a tight little subcompact package. Last year's Tercel, in fact, led its class in the J. D. Power consumer opinion survey of vehicle initial quality. Running up and down the gears, Tercel complied aggressively on demand.