Scion Hopes Older Target, New Models Will End Slump

Brand Has Struggled for Years

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After struggling for years, Toyota's youth-oriented Scion brand aims to get back on a fast growth track by adding products that are more pragmatic and by gearing its advertising to a slightly older crowd.

For dealers who remained loyal -- and that has been nearly all of the 1,000-some retailers -- the patience could soon pay off.

Scion is targeting sales of 100,000 in a few years, after watching volume slump 15 percent to 58,009 units in 2014.

"Our goal is to get back over 100,000 units within the next couple years," brand boss Doug Murtha said at the Detroit auto show. "150,000 is where we'd love to be, and I think that is a reasonable level."

Mr. Murtha pointed to the pre-recession glory days of 2006 when Scion was selling 173,000 units with only three nameplates, just three years after the brand's launch in 2003.

"We've shown that the dealer network, with the right product lineup, could go from zero to 173,000 in fundamentally three calendar years," Mr. Murtha said. "I think we can very easily get back over 100,000 with the right products."

Late arrivals
Today, Scion has five -- though it hasn't added a new one for three years and is discontinuing two: the boxy xB and the Yaris-based xD hatchback. The good news is that two new cars arrive in 2015; the bad news is that they arrive toward the end of the year.

That means Scion expects minimal if any sales growth in 2015 while it waits for those two vehicles to arrive.

One will be a sporty hatchback dubbed the iM that is based on the Auris hatchback sold in Europe and Japan. The other will be an as-yet-unnamed sedan, the first four-door in the Scion lineup.

Scion remains a dark spot on an otherwise sparkling sales chart for Toyota Motor Sales U.S.A., which booked healthy sales gains in 2014 for both the Toyota and Lexus brands. Scion sales fell to 45,678 units in 2010 after peaking at 173,034 units in 2006.

With volume slumping in 2013, the brand signaled that dealers who didn't have the stomach to ride out the storm were free to leave.

In November 2013, Toyota Motor Corp. President Akio Toyoda urged U.S. retailers to be patient for "a few years" as the company prepared new product.

Most dealers heeded that plea, Mr. Murtha said. Scion had 1,006 dealers back then; today it has 1,003.

"The message we heard back was 'They get it,'" Mr. Murtha said. "And when push comes to shove, they don't want to give up."

The two vehicles arriving this year represent two of the three new models Scion says it will bring to market in the next three years. The five-door iM hatchback marks the brand's first new design in three years. Scion is promising a car that is sleek, sporty and priced below $20,000.

Scion offered no details about the upcoming sedan. Automotive News has reported that the car will be a derivative of the Mazda2 compact made in Salamanca, Mexico.

New trends
The sedan is part of Scion's mandate to try new things. The design will be "polarizing," Mr. Murtha said, but it also will respond to two trends Scion is trying to tap.

One is buyers who are more pragmatic than they were during the heady days before the global financial crisis. People have less money to spend and want more functionality from their cars; they are less concerned about making a trendy statement.

"There is an element of pragmatism. … No. 1 is the financial reality," Mr. Murtha said. "It has to be more one-size-fits-all. They are unable to be as frivolous with their vehicle purchase as someone 10 years before them."

The other trend is a slightly older audience.

Scion is tweaking its advertising, which is handled by San Francisco-based Attik, to target a hypothetical customer aged 26, instead of 22 as before, Mr. Murtha said. This isn't the first time the brand tries to grow by aiming older.

Both forces will deliver cars a little less quirky.

The third of the three upcoming products is rumored to be a compact crossover. Mr. Murtha declined to offer details, calling it a product "that's not going to as easily fit into a bucket."

He said the product plans call for "that little dose of pragmatism."

Mr. Murtha said: "As we've tested some product concepts that head out there on the quirky end of the spectrum, the interest in that has diminished."

--Hans Greimel is a reporter for Automotive News

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