In a full model change in June 2007, the Allion entered the second generation. While its mechanical structures and components were identical with those of the sister car Premio, the Allion had a sportier look. The body became lighter and sturdier, and the cabin became more spacious although the body dimensions remained virtually unchanged from those of the previous model.

Its advanced equipment and accessories included the smart entry & start system, a rearview monitor in color, and an HDD navigation system compatible with the latest G-Book mX telematics service. In addition to the initial engine lineup of 1.5- and 1.8-liter units, a 2-liter valvematic engine (3ZR-FAE) was made available in January 2008, cutting the emission by 75% from the level required by the 2005 emission standards, and also achieving 20% better fuel economy than required by the 2010 fuel consumption standards. The transmission was a Super CVT-i. The 1.5-liter model achieved 15% better fuel economy than the required level of the 2010 fuel consumption standards in October 2009. In April 2010, the 1.8-liter model adopted a valvematic engine (2ZR-FAE), and the entire Allion lineup became eligible for the eco car tax incentives. In May 2010, the 1.5-liter model achieved 25% better fuel economy than the level required by the 2010 fuel consumption standards.