Toyota Celica tipped to return with hybrid AWD powertrain

Key highlights:

• Celica could return with a 2.0-litre hybrid and all-wheel drive
• New coupe reportedly targets the $65,000 Honda Prelude
• Toyota could position it as the entry-level GR sports car

Toyota could revive the Celica after more than two decades in 2027, with a new hybrid-powered, all-wheel-drive coupe reportedly targeting the recently returned Honda Prelude.

Toyota has yet to formally reveal the eighth-generation Celica, which last sold in Australia in 2005, but a Toyota North America executive already confirmed in 2025 that the company had started work on a new model that could bring the nameplate back.

Since then, a camouflaged 2-door prototype linked to Toyota’s next World Rally Championship (WRC) contender has appeared in Portugal testing ahead of its planned competition debut in 2027.  Toyota is planning to actively test the coupe shape in the WRC to market and preview the styling of the new road-going Celica.

The new Toyota Celica is highly likely to come to Australia, though an official launch has not yet been officially locked in. 

Hybrid power for a new GR entry point

According to reliable reports, Toyota plans to give the road-going Celica a 2.0-litre hybrid powertrain and all-wheel drive and make this coupe an entry point for Toyota’s Gazoo Racing (GR) performance range.

This setup would place it directly against the 2-door Honda Prelude coupe, which returned to Australia in 2026 after a 25-year absence and uses a hybrid powertrain based on the Honda Civic.

The Honda Prelude uses the Civic’s 135kW/315Nm hybrid system but adds brakes and suspension components from the flagship Civic Type R, which itself competes with the Toyota GR Corolla. Honda offers the Prelude in Australia in a single grade for $65,000 drive-away.

Corolla underpinnings

Toyota will reportedly use the next-generation Corolla as the Celica’s mechanical foundation. New Corolla previewed through a concept at the Tokyo motor show in October 2025 and the production version is expected to debut later this year before launching in 2027.

Also read: Lexus RX Morizo RR could be a 600kW-ish BMW X5 M rival

Where the Celica could sit in the GR family

Toyota could position the Celica at the bottom of the GR range, which raises questions about the current GR86, which entered production in 2021 and shares its platform with the Subaru BRZ.

7th generation Toyota Celica (Source: Toyota Newsroom archives)

The rear-wheel-drive GR86 uses a naturally aspirated 2.4-litre four-cylinder petrol engine and offers a manual transmission and is priced from $43,940 before on-road costs.

The reported Celica powertrain would take a very different approach. Its 2.0-litre four-cylinder turbo engine reportedly matches the unit Toyota is testing in the mid-engined GR Yaris M concept, and Toyota could also use the same engine in another mid-engined sports car that may revive the MR2 name.

The WRC contender, which is testing the coupe body of Celica will be different under the hood as Toyota expects its 2027 rally car to use a development of the current GR Yaris and GR Corolla’s 1.6-litre three-cylinder turbo engine. So, Toyota is taking advantage of a major FIA WRC rule change to test the body of the upcoming Celica using a different engine configuration than what its road version will ever see.

Gazoo Racing marketing manager Mikio Hayashi said that the smaller engine “cannot meet emissions”, forcing Toyota to consider a 2.0-litre engine for the production Celica.

Toyota’s three sports-car brothers

 A Toyota Celica comeback would support Chairman Akio Toyoda’s plan to reunite Toyota’s “three brothers”: the Supra, MR2 and Celica.

Toyota revived the Supra in 2019, but the current fifth-generation model ended production in March 2026.

The Celica could therefore join the GR86 and any future MR2 as part of a broader Toyota sports-car strategy, while its reported hybrid powertrain would give the revived nameplate a very different character from the petrol-powered Celicas of the past.