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post #1 of 7 (permalink) Old 08-08-2008, 11:15 PM Thread Starter
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After 5 funky years, Toyota's Scion now finds itself in a funk

From Automotive News:

After 5 funky years, Toyota's Scion now finds itself in a funk
Mark Rechtin
Automotive News
August 5, 2008 - 12:01 am ET

LOS ANGELES Scion got off to a fast start five years ago, but now Toyota executives are forced to rethink their funky experiment and do it a lot sooner than they expected.

At issue is Scion's mission and whether the idea behind the trendy brand still makes sense.

A year after the second generation of Scion's youth-oriented vehicles debuted, Toyota faces several problems:

-- The number of young people shopping Scion has dropped dramatically since 2006.
-- Before $4-a-gallon gasoline gave all small cars a big boost in April and May, Scion was in a slump it couldn't seem to get out of. And in June, sales were declining again.
-- While the brand had attracted fuel-economy-minded buyers, many are much older than Scion's demographic target: 18- to 24-year-olds. That threatens the hipster image Toyota has carefully cultivated for Scion.

So was launching a youth brand such a hot idea after all?

"If we could relaunch Scion, I wouldn't ever have called it a youth brand, because it's a kiss of death," says Brian Bolain, a former Scion corporate manager who now runs Lexus' lifestyle events. "It creates problems when you start labeling."

Bolain says it is better when a brand can speak for itself.
"Scion is being forced to change," says Jeri Yoshizu, Scion's manager of sales and promotions.

"We have to refresh our message and move our picture to the new 18- to 24-year-olds."

But the constantly shifting target makes marketing a challenge, Yoshizu says.
The first-generation Scions were big hits with young buyers when they launched in California in 2003 and elsewhere in 2004.
But from last September through January, monthly sales declined from each previous month, even though dealers had two redesigned models in their showrooms. Year-on-year sales fell for 17 straight months.

The losing streak ended in March. Then when fuel prices soared in April, Scion sales shot up 41.5 percent compared with the previous April, when barely any cars were in stock during the first generation's selldown. Sales climbed 28.4 percent in May but were down again in June.

Why the slump?
What's going on? Well, online shopping of Scion is barely half of what it was during the boom years of 2005 and 2006, according to industry analyst Compete Inc. At that time, Scion routinely attracted 100,000 to 120,000 Internet shoppers a month. Since the launch of the redesigned xB and xD last summer, Scion has scratched 60,000 Internet shoppers only once.
And the number of 18- to 34-year-olds shopping the brand also has declined sharply.

"Scion is not attracting its targeted audience as well as it had in 2004-2005 and even as recently as 2006," says Hal Wurster, managing director of Compete's automotive practice.

Jack Hollis, Scion's vice president, acknowledges the challenges. But he says his measure of success is not sales numbers but whether Scion is luring new, young customers to Toyota.

"How do we expand without making Scion into a traditional car company?" Hollis asks. "Experimenting with an automotive brand is tricky in a down market because it magnifies the risk. But if you don't try anything, then you are just the same as the entire industry."

Says Jim Lentz, president of Toyota Motor Sales U.S.A. Inc. and the first vice president of Scion: "The original Scion goal was all about transparency and reducing time to purchase cars and vehicle personalization, and none of that has changed. Scion still remains relevant today."

Buyers getting older
Some dealers say higher prices for the second generation of products hurt the brand with younger buyers. Toyota says the boxy xB and the tC coupe still retain a young customer base. Indeed, the coupe attracts the youngest buyer of any new vehicle age 24. But the small xD hatchback is another matter.

The rush to fuel-efficient cars is changing Scion's demographic profile. Nielsen Online says online consumers perceive Scion as the second-most fuel-efficient brand, behind Smart. Mainstream consumers increasingly are interested in Scion, says Julie Enzweiler, Nielsen Online's automotive research director.

Lots of baby boomers shopping Toyota for an econobox are drawn to the xD in the Scion corner of the store. Hollis says the average age of the xD hatchback buyer climbed from 37 years old to 42 in just three months.
"Fuel economy made people look at the Yaris and Matrix," he says, "but then they also see the xD and say, 'Hey, what's that?' "

Angel Diaz, manager of Westbury (N.Y.) Scion, on Long Island, says an older crowd started shopping Scion when gasoline prices spiked.

"Once they see what Scion offers in terms of equipment, and getting 32 mpg for $16,000, it becomes more widely accepted," Diaz says. "It's just not the edgy crowd coming in anymore. I'm a little concerned about that."
To slow the influx of older consumers to the xD, Toyota is launching a five-door Yaris in August. The Yaris and xD share the same platform, but the Yaris has been sold only as a three-door and a sedan.

Aim at new target?
Another concern: Should Scion continue to target its original customer base or look for younger buyers?

"Today's 23- to 28-year-olds are maturing into Toyota or Lexus," says Yoshizu. "They don't stay experiencers for the rest of their lives. If pop culture is going to change and always target 18- to 24-year-olds, then we need to change to appeal to them, too."

As a result, Scion is gently shifting away from its hip-hop music connection. A hip-hop offshoot known as electro is now commanding more attention from teens and college students and, therefore, from Scion. The brand's link to street art and student film will continue.

Still, Dawn Ahmed, Scion's corporate manager, says the brand can't just walk away from its original buyers.

"Being 'your older brother's car' is not necessarily a bad thing," says Ahmed, who left Scion to launch the Tundra pickup and has recently returned.
Ahmed says Scion still seeks provocative ways to connect with young buyers. Recently, it has been the lone sponsor of the bizarre cartoon "Assy McGee" on the Cartoon Network's late-night "Adult Swim" segment. McGee is a vulgar, gun-slinging policeman whose body stops at his unclothed buttocks. Each episode has a fake Scion commercial starring McGee that mocks the stereotypical small-town car dealer.

New products?
Hollis says Scion needs another vehicle in the lineup.
"A fourth product is essential," he says. "It could be an SUV. It could be a hybrid. We want a fourth product that buyers of the other three Scions don't like."

Whatever gets added, Hollis wants the sticker price to stay below $20,000.
How much Scion's lineup can expand will depend on whether Toyota continues to give it license to create products. Yoshi Inaba, who launched Scion as CEO of Toyota Motor Sales, says Scion risks having its product plan marginalized by the parent company.

"Our second-generation products were not as free as we thought we would be," says Inaba, who retired from Toyota to run the international airport near Nagoya, Japan. "The xB and xA successors are a similar concept, slightly bigger. We are coming into a normal model-change cycle, not doing anything faster, which I am not happy about."

Still, it is hard to argue with Scion's success.

More than 500,000 of the 600,000 Scions sold have been to people who never had been inside a Toyota store. More than 80 percent buy another Scion or move on to a Toyota or Lexus. Accessory sales per vehicle are double those for the typical Toyota. Lentz also is proud that the dealer body has kept the brands separate.

"In the beginning, dealers weren't sure about Scion's menu pricing and the store-within-a-store," he says. "But they gave it a chance, and even though we've had hot markets and cold markets, they have really stuck to the overall business."

The dealer body has expanded from what was to have been a boutique offering. On Jan. 1, 2005, Scion had 856 retailers. But as sales soared in 2005 and 2006, more dealers signed up. Currently, 982 of 1,234 Toyota dealers carry the brand. That has driven average sales per outlet down, but Toyota says it's not worried.

"It's never been about the numbers," Hollis says.
Scion's biggest risk may be that it is evolving into just another brand selling compact vehicles.

"Scion was intentionally created to be different, but it has always had to work to stay separate," says Bolain. "You don't want to let the parent company dominate, but it can happen."
Adds Lentz: "It's more of a battle now. We have to re-educate TMC on the reasons for Scion."
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post #2 of 7 (permalink) Old 08-09-2008, 07:20 AM
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So Scion was a youth brand? I've never seen a kid drive that box of a car. Most older people.
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post #3 of 7 (permalink) Old 08-10-2008, 02:44 AM
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I'm in their age bracket, and I only know 2 people in their target audience who can even afford a new car, let alone one as fugly as the scion. :P Even if they offered it to me for free I wouldn't drive that thing! Ick!
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post #4 of 7 (permalink) Old 08-11-2008, 09:56 AM
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Here is a suggestion Toyota, 6 speed automatics and better engines.

Who wants the old 2.4?

and where is the Valvematic?

Perfect for the tC.
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post #5 of 7 (permalink) Old 09-08-2008, 12:39 PM
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The TC can be pretty pimp, check out Chris Rados
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post #6 of 7 (permalink) Old 09-08-2008, 02:05 PM
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The main problem with marketing cars to the young crowd is that none of us can afford to buy a brand new car without getting into some serious debt numbers. I'm proud to say that I currently have ZERO debt and plan to keep it that way for a while. Obviously I'll be buying a house and another car sooner or later so I'll be paying off the man again soon enough but for now its very relaxing to not have those worries.

If a car company can find a way to build a fun, sporty, economical, but still practical car at or slightly above $10K they would have HUGE sales. The original VW Bug is a perfect example, cheap, easy to maintain, easy to mod, and it was a major success when it was in production. It wasnt the best car but it was a very good all around car.

I highly doubt any company would follow my advice, I'm just some dumb kid, but I just felt like ranting a bit...

"Once you establish yourself as an eccentric, you rarely have to explain your actions."
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post #7 of 7 (permalink) Old 09-09-2008, 04:03 AM
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funny thing is...their new models aren't as fuel efficient as they used to be. the xb (poo box) dropped major mpg figures for a measly 30-40 hp gain. its at like 22/26 or something now...and people would probably much rather go with a 4x4 with that mpg rating (like the patriot or compass...they have more hp too). i think the patriots only a couple of grand more wouldnt be a hard decision i dont think.
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