DETROIT —
What's wrong at Scion? In a year when small cars should
flourish, Toyota's small-car brand is in the tank.
Through October, Scion's U.S. sales
have fallen a resounding 50.6 percent versus 2008 —
far more than Toyota's corporate decline of 23.2
percent, worse even than the Chrysler Group's 38 percent
freefall.
Outsiders suggest the brand created to
revitalize Toyota's stodgy image may have lost its way,
but Scion plans to expand its lineup and replace its
mainstay tC coupe.
Scion debuted with hoopla in 2003.
Developed by a team of young Toyota executives, Scion
promised to sell a new kind of car in a new way.
The cars would be small, inexpensive
and above all, cool. They'd win a new generation of
buyers who dismissed Toyota as their parents' car. Scion
took guerrilla marketing corporate, teaming the appeal
of indie rock bands with the engineering and sales savvy
of the world's most profitable automaker.
Scion launched with two cars: the xA,
a little hatchback that never sold well, and the xB, a
funky little box that quickly became the brand's icon.
It added the tC, which joined the xB as a second hit for
the brand, in 2004.
Scion's first act was a success, but
it stumbled with the encore. The xD hatchback sold at
about the same rate as the xA it replaced. The
second-generation xB grew bigger and more powerful than
the original, losing much of the first car's hip club-goer
appeal.
"Scion should be Toyota's
innovation factory — always at the cutting edge of
where the auto industry is headed," said Jim Hall,
managing director of 2953 Analytics in Birmingham.
"Scion should reinvent itself every five
years."
Early success may have undermined
those change-the-system-from-within goals. Scion sales
rose steadily, peaking at 173,034 in 2006 before
beginning a three-year decline. Every automaker's sales
plummeted in 2008-09, but Scion dropped nearly 25
percent in 2007, the last of the auto industry's boom
years.
"Scion hasn't been a standout for
any product reason," said Mike Bernacchi, a
marketing professor at the University of Detroit Mercy.
"There hasn't been much innovation from Scion
vehicles. It made an early splash, but hasn't shown
great legs."
There's a disconnect between Scion's
cars and its marketing message, said Rebecca Lindland of
IHS Global Insight.
"Generation Y," the 25- to
31-year-olds Scion targets, "doesn't like to be
patronized," Lindland said. "You can't force
guerilla marketing onto a product that doesn't appeal to
them any more than you can give yourself a
nickname."
Scion scored some notable successes,
however. The median age of Scion buyers — 47 — is
second lowest among all brands, said Alexander Edwards,
president of Strategic Vision, a San Diego research
firm. However, it has trended steadily older since being
an industry-leading 41 in 2006, he said. The median age
of all new-vehicle buyers in 2009 was 54.
Scion's internal figures show a lower
median age, and three-quarters of Scion buyers are new
to Toyota Corp., said Scion Vice President Jack Hollis.
"We have the youngest customers in the industry.
"Scion's not about sales
totals," Hollis said. "It's about getting a
new type of customer."
Scion was initially conceived to have
a two- or three-vehicle lineup, but it's going to grow.
"My goal is to expand,"
Hollis said. "There's no way to say if it will be
four, five or six models. We've got to figure out what's
the next type of buyer we want to reach and develop
vehicles for them."
Scion's goal was never to keep buyers
for a lifetime, but to feed them into a lifetime as
Toyota and Lexus owners.
"They started with a very
innovative and aggressive idea," said Stephanie
Brinley of AutoPacific. "When the first vehicles
were successful, they got nervous about losing sales and
lost the innovation."
Scion's next defining moment is to
come when it replaces the sporty tC in 2010.
"Creating a brand to feed buyers
into Toyota and Lexus is risky," Lindland said.
"If it doesn't work, you're committed to a brand
that loses money. We're not sure how many additional
vehicles Toyota has sold because of Scion.
"Just because a brand has a
mission, that doesn't mean it will succeed."