The first focus of development was to give the new model a distinctive and innovative shape that contributed to the vehicle's fuel economy aerodynamically. Agetsuma stated the following concerning the importance of aerodynamics for the new model: "In addition to increasing vehicle performance, aerodynamic performance became an extremely important realm in automotive design. I recognized the need for our designers to study aerodynamics, so I gathered them together for a lecture from the aerodynamic research team at the Higashi-Fuji Technical Center to learn exactly what qualifies as an aerodynamically efficient design. We even carried out more than 400 hours of wind tunnel testing. In the end, we were able to successfully incorporate all of this knowledge into the new model's design. It is fair to say that this turned out to be one of the main characteristics of the fourth generation Corolla."

Agetsuma's words turned out to be true — the new Corolla was introduced with a sleek, slanted nose and a high-deck styling.

Originally, plans called for the use of the 1.5-liter 1A-U engine already loaded in other models. However, in the fall of 1978, only six months before the scheduled release, the 3A-U prototype engine was developed with the same 1.5-liter displacement and tenacious power in lower speed ranges. Agetsuma decided on very short notice to switch to this engine. However, immediately after that, problems occurred as cracks were generated in the cylinder head in the production trial stages. With that, Agetsuma and the engine testing staff gave up their year end and New Year's holidays to work on necessary countermeasures. The prospect was finally visible in February 1979, a mere one month before production of the fourth generation Corolla was scheduled to begin. Production of the 1A-U engine, which was initially scheduled for use, was discontinued after a year and a half, so Agetsuma's decision turned out to be the correct decision. However, according to Agetsuma, "At the time, I took quite a bit of heat, because the engine isn't something that could be easily interchanged."

A 4-link coil with a lateral rod that offers superior riding comfort and driving stability was adopted for the rear suspension. The merit of the conventional leaf spring suspension was its strength on bad roads, and this type of suspension had been used in successive Corolla models to meet the demanding road conditions throughout the world. However, an incident spurred the change to this new suspension. While Agetsuma was visiting Holland, the president of an agency showed him the leaf spring in a horse-drawn carriage and stated that the Corolla was the same as that carriage. Agetsuma later reflected on that moment and stated, "It was a major shock. But while it was difficult, we were bold enough to make the change."