Daihatsu, a subsidiary of Toyota, observed an increasing demand for SUVs and crossovers in the market. Unlike other automakers, Daihatsu did not have to build an SUV platform from scratch, as they already had the required technology and platform to do so. However, there was a disagreement between the technical and design departments. Although the technical department was ready to create a small-sized SUV, the design department had a different opinion. As a result, the Terios had a round-shaped design with swept-back headlights, which gave it a different look from a typical off-road vehicle. However, the flared wheel fenders made it look like a genuine 4x4 vehicle, and the tall door panels made the car look taller than its actual height. The rear of the vehicle featured a small window behind the rear doors and blackened D-pillars, creating a wrap-around image.

Inside, the Terios had enough room for four adults. Even though it was designed for a small-sized city vehicle, it was installed in an SUV. The binocular-style instrument cluster hosted the speedometer in the middle, the tachometer on the left, and the fuel gauge on the right. The high-mounted front seats provided extra room for the rear-seated passengers. The trunk in the back was small but could carry a few backpacks for children.

The Daihatsu Terios had a 1.5-liter gasoline engine under the hood, which was sufficient for moving this small vehicle in the city. Additionally, a 4x4 system was installed, which was useful in winter conditions.

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