1985 was a transition year for Subaru. The hatchbacks in base and DL trim carried over for all of 1985 with both front drive and “on-demand” 4WD configurations. The sedans, also offered in both forms, were completely new cars. More aerodynamic sheetmetal enveloped a bigger, plusher interior package. While the GL hatchbacks kept the 73-hp 1.8L pushrod engine (the base hatch retained its 69-hp 1.6L), the sedans all got one of the new 1.8L OHC engines that produced 82-hp in carbureted form, 94-hp with EFI, and 111-hp when turbocharged. Transmission choices involved the basic 5M/3A, but the DL hatch came with a 4×2 box while the top-line 4WD Turbo had a dual range 5spd.
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