Toyota Needs to Restructure Scion to Prevent Its Certain Demise

Scion FR-S 10 Series Front

Here’s an interesting sales statistic from the world’s largest automaker: in the United States, Toyota almost sold more Camrys in July of this year than all Scion cars from January to June 2013. It is a stark reminder that while the FR-S is turning out to be not only a critical success, but also a sales monster, Toyota’s youth-oriented brand is languishing. The iQ city car is officially a dud, tC figures are dwindling, and neither the xB or xD have been updated since 2007. While the FR-S has accomplished one of its goals (bringing more people into dealership showrooms), the fact remains that Toyota needs to reevaluate the longevity of a brand that once introduced a new type of car with the xB box and destroyed the competition with the tC, a sporty coupe with legitimately good value. If Toyota isn’t committed to creating new product to keep Scion fresh, is it time to put the 10-year-old automaker out to pasture?

A few days ago, Toyota announced that dealerships carrying Scion products could drop the brand without fear of penalty. It’s great news for dealers to clear space from their lots to bring in quick sellers like the Camry, Prius, and Corolla, all of which are included in Toyota’s current clearance event. Scion products, in contrast, do not rely on periodic sales to move units, and the no-haggle pricing across the board means that buyers cannot shop around for the best deal. It’s a strategy that Saturn was founded on, but like Saturn, Scion does not update products significantly on an annual basis and last year’s model is frequently identical to the current one.

Scion Sales

Sales figures courtesy of Scion

Buying experience notwithstanding, most of what made Scion unique in the beginning stages was softened in the midcycle refresh for the xA (xD), xB, and tC. The second generation xB was much more bloated than its predecessor, a move which turned off more buyers than Scion gained. Sales of the first gen xB in 2006 were a healthy 61,306, while the new model in 2007 brought that number all the way down to 45,834. Even as gas prices were shooting skyward, the xA’s replacement, the xD, saw sales of the subcompact plummet from 32,603 in 2006 to 20,495 in 2007. tC units took a huge hit during the financial crisis that began in 2008, although they rebounded slightly in 2011 when the reworked tC launched amid an improving economy. The iQ has likely seen its peak, as sales of the diminutive two door have so far only reached 1/4 of what it sold last year. By the time December comes around, it is likely that the iQ will have sold half what it did in 2012.

Scion xB Exterior

The Scion xB has been the same since before the financial crisis.

In contrast, the FR-S has done remarkably well. Despite being the most expensive Scion on sale today, the car is fresh and is basking in the glowing reviews from the press and consumers alike. It is truly a superb car, with an eager engine and planted demeanor.  It is Toyota’s return to sports car manufacturing and is Scion’s number one selling car this year, but even that comes with an asterisk.

The FR-S is marked with a Toyota badge and the GT86 moniker all over the world save for the US, Canada, and Puerto Rico. No car in the Scion stable is unique to the brand, as each is sold under the Toyota name in other markets. If the parent company was so inclined, it could shutter Scion altogether and rebadge everything with a big “T” on the hood. Not that the sales of any of those cars warrant that sort of behavior (except the FR-S), but it could theoretically be done. And with CEO Akio Toyoda on record saying that Toyota needs to seriously court performance-minded enthusiasts to improve its brand image, why would he give up future product to an under-performing Scion?

We haven’t even gotten into Scion’s target audience, the so-called “millennial” generation that is reportedly shying away from purchasing cars altogether. The reason for this has lamely been attributed for reliance on smartphones and other tech products that allow young people to connect more immediately and freely than they can driving an automobile. It’s a flawed hypothesis to ask teenagers that, given a choice, would they rather have an iPhone or a Mustang, and then to conclude the reason for the downfall of the democratically decided loser is a direct result of the winner’s success. Jalopnik editor Patrick George makes the argument that it is the lack of disposable income that prevents “millennials” from purchasing expensive cars, but Scion’s problem in particular is that it has no new exciting cars [except for the incredible but impractical FR-S]. While this view makes sense, a sales downfall is complex and multilayered with no one right answer. The truth is closer to this:

Scion specifically markets to a demographic that has little disposable income and cannot easily afford what Scion is selling. Without new products that speak to that audience, Scion is giving up market share of younger buyers that can afford a car to brands that cost less, like Hyundai and Kia, or to automakers that produce cars that rely heavily on infotainment systems that young people profess a desire for, like Ford and General Motors. Without any combination of new cars, tech-focused driving experience, refocused branding, and the destruction of “haggle-free” pricing, Scion runs the risk of going down in the history books as a quirky sidenote in the Toyota timeline.

All photos courtesy of Scion

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About Cameron Rogers

Cameron Rogers is the founder and lead writer at Downshift Autos, the only automotive blog on the Internet*. Born in the back of an AMC Gremlin, Cameron vowed to never let this extraordinarily embarrassing detail define him, so help him God. He drives a GTI but absolutely will not shut up about it if somebody asks. He will not hesitate to let people know that no, they shouldn't get a Porsche 911 when a Morgan 3 Wheeler is so obviously the superior choice. He is obsessed with the seats of a Carrera GT and the steering wheel of a Fisker Karma. He once sat in the driver's seat of a Tesla Model S, his greatest accomplishment to date. He is just now realizing that writing an autobiography, however miniscule, in the third person is odd and unnerving. *As of this writing, Cameron has been informed that there are, in fact, many websites and blogs centered around cars and car culture. He regrets his grievous error.

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