Toyota and Subaru have jointly announced their small sports car project will have to wait until the economy gets better. Costing under $20k, the FR would have been a most competitive low-cost, high-performance vehicle for its segment.

The economic downturn has claimed another victim. Subaru and Toyota have confirmed their joint small sports car project is on hold. Together, they announced the new vehicle back in April, 2008, as a rear-wheel-drive with Subaru's horizontally opposed boxer engine. Both companies were to sell the car under different names, and with different bodywork.

Toyota has had a small stake in Subaru since 2005, when GM dumped the label. Since then, the two have formed a limited alliance that will see an American Subaru plant as a production facility for the Toyota Camry. That part of the plan is still in effect. Subaru was also set to receive an OEM mini-sized car from Daihatsu, and a small OEM car from Toyota.

Tentatively called the FR, the co-designed 2+2 compact sport vehicle would have had an optimized weight distribution, and was speculated to have as much as 220 hp from Subaru's 2.0-liter flat four-cylinder. The project was to come to market in 2011, possibly for less than $20,000. It would have been perfect for both companies, as Toyota needs an affordable performance-driven ride, while Subaru needs a performance car that costs less than the Impreza WRX. At 1200 kg, the car would have had a strong power/weight ratio for that price.

We were excited from the start about this vehicle, and we are optimistic that Subaru and Toyota have chosen to put the FR "on hold" instead of outright cancelling it.

Gallery: Toyota Subaru Joint Compact Sports Car Project on Hold