Within days of announcing Toyota's formation of a "Committee to create interesting cars", this summer's Best Car Plus magazine reveals that the long-rumoured new AE86 type car has indeed been spawned by the group and should be in showrooms in the winter of 2008.

The new article goes into some detail of the new car's spec. Under 4m long and 1.7m wide, it's pretty low at 1.35m tall, and engineers have been directed to keep weight below 1,000kgs. Power will come from a 1.5L 2NZ-FE good for 120 horsepower. What has been unknown until this time is where Toyota would source a cheap RWD drivetrain, but Best Car has learned that it will come from new partner Fuji Heavy Industries - better known to you and me as Subaru.

And the best news of all? The committee's final directive is to keep the new car's sticker price below 1.5million Yen. That's about $12,300 USD in today's money.
Possible Models for us of the Levin

The Turbo 2NZ-FE making 150BHP; was rumored to be used in these as well....(Confirmed by another JDM land magazine)...

Edit for engines:
So we got 3 models..
The Base Levin: 1.5L
AE86 The Turbo 2NZ-FE
AE86 Trueno...Camry I4 (Sold in all the TC's /xB's and new XA the TA? )

And if Toyota decides to say we need a V6/I6...They'll source one from the IS250. or for V6 that 268 Hp Camry motor.
It's become public that Toyota and FHI are making adjustments to move in the direction of jointly developing a sports car. The sports car will be sold as a Toyota and the use of FHI's distinctive Boxer engine is under consideration. The details will be worked out by this fall. Meanwhile, the plan is for Toyota's subsidiary, Daihatsu, to supply FHI with subcompact cars. This will be the first domestic collaborative project between both companies since their capital tie-up in October 2005.

Toyota owns 8.7% of FHI shares. The jointly developed sports car that is under consideration will target younger customers, who have been losing interest in cars. The price will be kept below 2 million yen (US$17,000). The engine displacement will likely be 2.0 liters or less, and the expected release date is 2010. Toyota discontinued production of its 「MR-S」 sports car at the end of July, and thus there is no sports car under the Toyota brand.

The Boxer engine that is being considered has very little vibration and produces high horsepower. Porsche also uses this setup, as it allows for a low center of gravity. However, compared with other engines, it is fairly expensive so the task will be to see how low the price can be brought down.

On the other hand, from Toyota's side, Daihatsu's 「ＣＯＯ」 (Toyota 「bB」) will be supplied to FHI. FHI plans rebadge the vehicle and start selling it as early as next summer. They project sales of 6,000 units per year.

Every domestic car manufacturer has been putting efforts into marketing subcompact cars. But FHI does not have a subcompact model priced less than 2 million yen under its entry level 「Impreza」, making its product offering very limited. With an OEM supply deal, FHI will focus R&D expenses on its best selling model, 「Legacy」.

At its factory in the US, FHI has been manufacturing Toyota's medium-sized sedan 「Camry」 since April 2007. In Europe, FHI will sell rebadged Daihatsu's OEM car under the name 「Subaru Justy」. Both collaborative efforts were limited to overseas and nothing domestically until now.