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| In this Wednesday, Nov. 19, 2014, file photo, the Scion iM concept is
unveiled at the Los Angeles Auto Show. Toyota announced Wednesday, Feb.
3, 2016, that it is discontinuing its Scion brand, aimed at younger car
buyers, after years of slumping sales. Beginning in August the MY17
Scion, the FR-S sports car, iA sedan, the iM 5-door hatchback and the
C-HR will be rolled into the standard Toyota line-up. Scion owners can
still visit Toyota service departments for maintenance and repairs. (Jae C. Hong/AP) |
Toyota is killing its youth-oriented Scion brand after learning an important
lesson: Young buyers simply want Toyotas.
Scion was formed in 2003 to court Generation X buyers, who didn’t like their
parents’ brands and didn’t trust traditional marketing, says Bob Carter, Toyota
Motor Corp.’s senior vice-president of U.S. operations. It was known for its
funky designs, like the boxy xB, and was the brand Toyota used when it wanted to
experiment with new kinds of marketing, like pop-up test or no-haggle
pricing.
But as those buyers matured, they started buying Toyotas.
Next came the Millennials. For a while, that generation delayed car buying
because they were underemployed and had too much student debt. But when they did
buy, they liked their parents’ brands and wanted Toyotas, too.
“For those buyers, frankly speaking, Toyota as a brand is more aspirational
than Scion was,” Carter said. Carter said Millennials made up nearly one-third
of the Toyota brand’s buyers last year.
There were other issues with Scion. The small, oddball lineup never connected
with buyers and cost a bit more, since features like touchscreens that were
optional on other cars came standard on Scions. Scion’s bestseller, the tC
coupe, starts at $21,330, or $2,600 more than a Honda Civic. Scion also doesn’t
have any SUVs, which are rapidly becoming the most popular style of vehicle in
the U.S.
At the brand’s height, in 2006, Americans bought just over 173,000 Scions. In
2015, they bought 56,167. By comparison, Toyota sold more than 363,000 Corolla
sedans last year.
So, beginning in August, 2017 model-year Scion vehicles will be rebadged as
Toyotas. The FR-S sports car, iA sedan and iM 5-door hatchback will be a part of
the Toyota line-up. So will the C-HR, a small SUV concept shown at the L.A. Auto
Show that Toyota will likely make. The tC coupe will have a final release series
edition and end production in August, according to Toyota.
Toyota says it achieved what it had hoped with the Scion, including
attracting younger buyers. Half of the 1 million Scions sold were bought by
people under 35, Carter said, and 70 per cent of those buyers were new to the
Toyota family.
Katie Seals, 22, was new to the Toyota family when she bought a Scion xD
subcompact about five months ago. Seals, a television reporter, lives near the
beach in San Diego and wanted something easy to park. She also wanted something
reliable but thought the Toyotas and Hondas she looked at were dull. And she
loved the xD’s sound system.
Toyota may not keep buyers like Seals. She said she liked having something
different, and would probably look around at other brands when it comes time to
buy again.
Carter said the company will bring some of its experiments at Scion to its
other brands. The Toyota Care maintenance program, which provides two years of
free maintenance, originated with Scion, he said. Lexus is currently running a
no-haggle pricing pilot borrowed from Scion, and Toyota will soon offer an
express purchase program. Scion taught Toyota that consumers want transparent
pricing and want to spend less time buying.
“Scion was the test bed,” Carter said.
Sarah Wall, a 39-year-old marketing and communications executive in San
Francisco, said she bought a Scion xD in 2010 because of the no-haggle pricing
policy. The car is distinctive, easy to park and has low maintenance costs, she
said.
Wall said she’s “devastated” that Scion will no longer be a separate brand.
But she says she would consider a Toyota in the future, especially if the brand
adopts no-haggle pricing.
Toyota’s decision will have minimal impact on dealers and owners. Scion,
which is only sold in the U.S., Canada and Puerto Rico, has no stand-alone
dealerships. The brand is sold through 1,004 Toyota dealerships, which will
continue to service the cars.
It’s not unusual for auto makers to kill a brand or pull it out of a
particular market. Ford Motor Co. killed its Mercury brand in 2010, and multiple
brands, like Izusu and Renault, have left the U.S. market. But Kelley Blue Book
senior analyst Karl Brauer said this is the first time a U.S.-specific brand
launched by a Japanese manufacturer has been scrapped.
Brauer says Scion was a victim of the success of the Toyota brand. The Toyota
Camry sedan has been the bestselling car in the U.S. for 14 years, and the brand
has a full lineup that appeals to Millennials and Baby Boomers alike.
Scion’s demise doesn’t necessarily spell trouble for other small car brands,
like BMW AG’s Mini or Daimler AG’s Smart, said Ivan Drury, an analyst for
Edmunds.com.
Those brands differentiated themselves from their parent brands more than
Scion ever did, he said.
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