The Motor Trend Car of the Year is an annual award given by Motor Trend magazine to recognize the best new or significantly refreshed car in a given model year.
Motor Trend, which debuted in 1949, was the first publication to name a Car of the Year. Over time, other organizations have selected a "Car of the Year", but those organizations' awards are not associated with Motor Trend despite the identical award name. The European Car of the Year award began in 1964 by a collective of automobile magazines.
Motor Trend's first Car of the Year award went to Cadillac's V8 engine models in 1949, powered by a novel and effective overhead valve design.
Changes: Split and Recombine
The earliest awards were given to the manufacturer, not to a specific vehicle.
Then in 1972, the radical, high technology, low volume Citroën SM won the COTY award. At this time, American cars were for cost reasons all one one simple proven engineering concept with mild styling variations (front engine, rear wheel drive, large, low compression engine, automatic transmission, live rear axle).  If COTY meant 'novel and effective design' then US-built cars would not be able to win going forward - the next new technology, US designed Chevrolet Corvair-type car was not on the horizon.  By 1976, the COTY award was split in two - Domestic COTY and Import COTY.
The 1999 re-combination of Domestic COTY and Import COTY was explained by editor Angus Mackenzie as "Because it's so hard to say that, for example, a Toyota Camry, built in Kentucky and designed in California, is less American than a Ford that may have been built in Canada or Mexico and designed in Europe." Since the combination of the awards, American cars have won the award seven times, and imports have won six times.
Motor Trend's Car of the Year is "one of the most prestigious honors bestowed in the auto industry."
The trophy for the winner, a depiction of calipers, is often used in the winning automaker's marketing and advertising. Most cars that win the award report a spike in sales.
However, receiving Motor Trend's recognition is no guarantee of success. This was the case of the nostalgic 2002 Ford Thunderbird, which did not meet expectations and was pulled from the market three years later.
To be eligible for the award, a car must be an "all-new" or "substantially upgraded" vehicle that has been on sale within 12 months from the previous November, vehicles that have been on sale for over five years are ineligible for the award.
Between the contenders, it is not a comparison test. In 2014 as an example, the Motor Trend judges debated and evaluate each vehicle against six key criteria:
well-executed exterior and interior styling; innovative vehicle packaging; selection of materials
vehicle concept and execution; clever solutions to packaging, manufacturing and dynamics issues; cost-effective technology that benefits the consumer
low fuel consumption and carbon footprint, relative to the vehicle's competitive set
active: help the driver avoid a crash; secondary: protect occupants from harm during a crash
competitive price and equipment levels, measured against vehicles in the same market segment
Performance of Intended Function
how well the vehicle does the job its planners, designers, and engineers intended
Motor Trend also only considers cars with base MSRPs less than $100,000 in order to avoid expensive luxury and super cars dominating the competition.
Vehicles are subjected a battery of tests: standard car tests such as skid-pad ratings, acceleration and quarter-mile times, and evaluations of the interiors are combined with a track run conducted by SCCA-licensed testers and taking the cars out on normal roads to test their drivability under normal conditions, and fuel economy. Trucks and SUVs add towing capacity and speed, plus an off-road course, to the normal regimen.
Introduced in 1970 for one year and then brought back in 1976 due to distinguishing differences between imports and American cars, was discontinued after the 1999 model year when the line between what is truly American and what isn't became very blurry.
^"Despite the incessant crowing that issues from the automobile industry about 'all-new' or 'original' cars, most such claims are egregious bragging. Automobiles are seldom created from blank sheets of paper. They are the result of steady, incremental development, metamorphosed from existing designs employing mechanical components already in the corporate inventory. Of course, carmakers do sometimes begin from the ground up - as in the recent cases of Chrysler's LH sedans, Ford's sales-leading Taurus and Sables, and the minivans - but such a process involves wagering billions in attempting to divine the future tastes of the public.Evolution is still safer than revolution, especially in Detroit. European and Japanese manufacturers have traditionally been more inclined to sell the same models for cycles of four to six years before introducing totally new versions, while the domestics played the 'all-new' game with basic vehicles that were sometimes as much as twenty years old. American manufacturers began to follow suit in the 1980s, having discovered that consumers were increasingly skeptical about their sheet-metal masquerades."- Brock Yates author and Editor-at-Large of Car and Driver The Critical Path: Inventing an Automobile and Reinventing a Corporation (Little, Brown & Company, 1996)