well i'll tell u as much as i know about this. i own the newer one, but both the old n new have same engine,
it is 1975cc (2C) engine that was introduced around 1995 internationally
produces 89hp @ 4000RPM and 203Nm of torque @ 2200RPM, red starts at 5000RPM, top speed is ~180
first of all its diesel, cheap to run, and quality ride due to the pull of the engine in any gear at low RPM coz of huge torque, secondly toyotas have a heritage of good resale in pakistan, in other countries it maybe otherwise. the 2C of the previous model of corolla produces slightly less hp due different top (cam, intake + exhaust valves) but has same engine, while the new 2.0d has 5 more hp with improved engine top (told me toyota folks).the diesel only beats 1.3 petrol care from 120 to 180, at higher speeds the drag is greater, so u need more power tht is torque (greater torque is produced by diesels thanks to its higher compression ratio), and diesel always has it plenty of it. while it CAN beat 1.6 petrol cars ONLY if your are climbing hills, again due to torque, otherwise the VTiz and SEz will smoke it.
as we are in pakistan, we can never see the light of the day, as the newer technology is never introduced here, today diesels are becoming close rivals to petrols due to the CTDI engine (Common-rail Turbo Diesel Injection), and even topping petrols in some cases, they have no bad emissions meaning no smoke. as other 2.0 diesels CDTI engines produce average of 120 hp and 300 nm torque, but we are stuck with this old technology. onother dissadvantge is shorter gear span resulting in loss of accerlation anyone here having a 2.0d can experience it, that it tht a 1.6 petrol can touch 60 in first, while diesel top at only 40, petrols do 100 in second diesel does 60, and so on.
so now i guess u know why its sucessful....cheap, engines pull, and resale...tc peace