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Sales Slow For Toyota's Scion Brand

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The Associated Press

Published: September 13, 2008

NEW YORK - Five years after Toyota rolled out a hip, inexpensive and fuel-efficient brand called Scion, the Japanese automaker still sees it as a tool to attract young buyers. But slowing sales of Scion's eye-catching vehicles indicate they may be losing some cachet.

Scion's August sales in the United States tumbled nearly 20 percent from a year earlier. So far this year, sales are up 2 percent - a noteworthy increase given the tough auto market. But that's compared to a remarkable slump for the brand in 2007, and it pales next to the growth of Toyota's and other automakers' small cars.

"There's real, viable opportunity for these models," said Rebecca Lindland, auto analyst with the Waltham, Mass.-based consulting firm Global Insight. "It seems a little bit strange that they wouldn't be saying, 'Hey, you know what, we've got a really big chance here, let's go for it.'"
Toyota Motor Corp. launched Scion in 2003 with two models: The xA, a stout, subcompact hatchback, and the xB, a boxy, five-door wagon. It rolled out the tC, a small coupe with a sportier look, a year later. In 2007, it replaced the xA with the similar xD.

Toyota priced the cars inexpensively and made them highly customizable, with options like fancy wheel covers and an array of audio upgrades. No-haggle pricing in hip showrooms was designed to make the purchase process easier on young buyers.
Toyota executives say Scion was never meant to be a top-selling brand, but is more about appealing to Generation Y and, ultimately, hooking its members as long-term customers.

Indeed, Scion buyers are the youngest in the industry, with a median age 20 years younger than Toyota's 52, said Scion Vice President Jack Hollis. And 47 percent of Scion buyers later purchase either a Toyota or another Scion, according to J.D. Power and Associates' Power Information Network.

"Scion is not about how many, but about who and how - meaning who we sell them to, and how we sell them," Hollis said.

Scion's marketing team worked to build a brand image that resonated with its target audience: urban-dwelling, mostly male twentysomethings. They sent mobile billboards to roam city streets. They posted guerrilla ads on construction sites. They eschewed prime-time TV advertising in favor of late-night or niche cable shows.

"You'll never see them during 'Lost' or 'Desperate Housewives,'" Scion spokeswoman Allison Takahashi said.

The brand had drivers like Josh Keeler in mind.

Earlier this year, the 23-year-old insurance underwriter was gearing up with two friends for a marathon road trip across all 48 mainland states, as fast as they could. The ended up choosing a 2005 Scion xB.

"I knew that we needed a car that was able to hold up for the trip and would be reliable," Keeler said. "I was looking for the biggest little car I could find. One that's bigger inside than out."

He settled on the Scion after taking one for a test drive at a dealership in his hometown of Salt Lake City. He liked its roominess, its fuel economy and its funky, boxy look. Ultimately, he bought a used maroon model with 17,000 miles for $9,900 on eBay.

He and his friends christened it the "Scionara."

Despite the youth appeal, sales in 2007 fell 25 percent to 130,181 and are up just 2 percent this year. Meanwhile, $4 gas has propelled demand for other similarly fuel-efficient models by leaps and bounds.

Sales of the Toyota Yaris, for example, are up 32 percent so far this year. The Honda Fit hatchback has seen a 56 percent rise, while Ford Focus sales are up 26 percent.

Scion's most-efficient xD model gets 33 miles per gallon on the highway, according to Environmental Protection Agency estimates. The Yaris gets 36, the 2008 Fit gets up to 34, and the Focus gets 35.

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