Andersson was born in Uppsala and grew up on a remote farm. His father bought a 98cc motorbike, which Andersson said sparked his love for speed and machinery. He began studying engineering in Uppsala and also marshalled ice races. He then worked as an apprentice to a blacksmith and later in a car repair shop, where the owner encouraged him to start racing after seeing his motorbike skills.
In 1958, Andersson completed his compulsory military service with the United Nations (UN) peace-keeping force in the Gaza Strip, where he survived typhoid and a fire. Upon returning home, his attempts to rejoin the UN had little success. A friend encouraged him to join a rally, where they finished sixth. Local rally drivers recognized his potential, but Andersson lacked the funds to race. His friend Bengt Söderström, a Saab factory rally driver, allowed Andersson to borrow parts to improve his car's competitiveness. Andersson turned down an opportunity to serve in the Congo with the UN to focus on his rallying career.
In 1963, Andersson drove as a factory-backed driver for the first time in the Swedish Rally, using a Mini. He impressed team boss Stuart Turner, who provided him with a Mini Cooper S for the RAC Rally. He drove for Saab in 1964 and 1965, feeling overshadowed by Erik Carlsson, whom Andersson believed received better machinery from Saab. In 1965, he competed in the first three championship rounds with Lancia, finishing third in each. He also won the Swedish World Rally in a Lotus Cortina. In 1967, he won the Monte Carlo Rally with Lancia.
Despite being signed to Ford for 1968, Andersson competed in the Daytona 24 Hours with Lancia and also in the Monte Carlo Rally. At the end of the 1970 season, he began driving for Alpine in 1971. Andersson won the Monte Carlo Rally, Rallye Sanremo, Österreichische Alpenfahrt, and Acropolis Rally with an Alpine A110, securing the International Championship for Manufacturers title for Alpine. In 1972, he finished second in the Monte Carlo Rally with Jean Todt as his co-driver. After the World Rally Championship's inauguration in 1973, Andersson, primarily driving a Toyota Celica, achieved seven podium finishes in 28 series outings. He won the 1975 Safari Rally in a Peugeot 504, co-driven by Arne Hertz.
In the early 1970s, Andersson owned his own rally team, Andersson Motorsport, which later became Toyota Team Europe (TTE). In 1979, he relocated the team from Uppsala to Cologne, Germany, to focus on competing in the World Rally Championship.
TTE did not achieve regular rally victories until the 1980s with drivers like Juha Kankkunen and Björn Waldegård. The 1990s saw the bulk of TTE's World Rally success, with Carlos Sainz, Juha Kankkunen, and Didier Auriol securing wins for the team. In 1993, Toyota Motor Corporation purchased TTE and renamed it Toyota Motorsport GmbH (TMG). At the close of the 1995 World Rally Championship season, TMG received a twelve-month ban from the WRC for utilizing an illegal turbo restrictor on the Toyota Celica GT-Four ST205. This system incorporated a bypass mechanism and spring-loaded devices to evade scrutineers, as reported by Hemmings.
In addition to its World Rally efforts, Toyota Motorsport attempted to win the Le Mans 24 Hours endurance race. The team developed the Toyota GT-One race car, which competed in the 1998 and 1999 races, achieving a best result of second place.
Following these motorsport endeavours, the Cologne factory focused on a Formula One project. Andersson was tasked with overseeing the new team, which designed and produced its first car in 2001. The Toyota TF101 served as a test prototype before Toyota's formal entry into F1. Mika Salo and Allan McNish drove the car in its first competitive season in 2002. Andersson, who led the team through its challenging initial years, retired in 2003 but remained as a consultant to Toyota Motorsport.
Andersson died in a vintage rally crash on 11 June 2008 near George, South Africa.
The Toyota F1 Team paid tribute to Andersson. Tadashi Yamashina, Toyota Motorsports director and Formula One team chief at the time, expressed shock and sadness. At the 2008 French Grand Prix, both Toyota cars carried black stripes. Jarno Trulli dedicated his podium finish at the event to Andersson.
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