It is not that Toyota did not expect the downsizing revolution, it is that Toyota does not believe the downsizing revolution lie. But now they have no choice, the market forces them.
False. Downsizing is not a lie. It has been proven to have positive effect on fuel consumption compared to NA engines, period. But along with downsizing, we had this horsepower war nonsense that forced a lot of downsized turbocharged engines to be rated out of their optimal operation zone. As a result, most cars with downsized motors didn't deliver the promised mileage gains, just because they are universally overpowered.
Downsizing has always been part of TMC's plan. In fact a turbocharged engine was supposed to be equipped by the 5th gen Prius. But the engineers could not meet the efficiency targets within the time they were given. Thus the decision went to using the optimized 1ZR-FXE since it could achieve their MPG goals anyway. The reason TMC did not rush downsizing is that a) they set the goals too high b) they have too many alternative solutions to play with already c) they were not interested in the horsepower war.
The only 'dirty' part of the downsizing revolution is the Germans using their political influence to make nations adopt cycles that give unfair advantage to downsized motors, and using their media connections to convince people they need excessive amount of power.
A comment from a TMEC (Toyota Motor Engineering & Research Center) engineer: our biggest headache is that we have too much technology to play with, it's a nice problem to have, but our competitors just choose to play dirty. Yes, he was referring to VAG.
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