Scion Not Scorched by 2008, but Wants Fourth Model

By Michelle Krebs February 2, 2009

By Bill Visnic

Scion xD 2009.jpg DETROIT -- Sales analysts for Toyota Motor Corp.'s Scion brand are still looking at the numbers from the last half of 2008 -- a disastrous six months for U.S. auto sales -- but the brand's vice president says the economy's credit meltdown probably did not hurt Scion as much as it might be assumed for a brand that broadly target's young and first-time buyers.

And despite the rapid and debilitating contraction of the U.S. market, Scion wants another model to sell.

Saying the rapid tightening of credit didn't seem to affect Scion's 2008 sales as badly as might have been expected, Andrew (Jack) Hollis told AutoObserver at the Detroit auto show, "we're looking into it right now," but added Scion's overall performance for the year seems to indicate credit availability is not a crucial component of Scion's sales potential.

Hollis points to the fact that although Scion's sales volume was down 12.5 percent for 2008 (113,904 sales in 2008 versus 130,131 in 2007), the brand's sales performance outpaced the broad industry (down 18 percent) -- and, according to data from Edmunds.com, Scion increased its market share by one-tenth of a point last year, to 0.9 percent of the market.

Edmunds data show that although several brands increased market share in 2008, only two -- Honda and Toyota -- increased by more than one-half a percentage point. And Scion was near the upper quartile of the 38 brands tracked by Edmunds in terms of percentage of sales loss in 2008, a year in which just three brands notched minor sales increases.

Considering the direness of the year, Hollis will take it.

He said Scion's ability to tread water is because, "This is a lifestyle brand," that does not rely on one type of customer -- despite Scion's stated mission of being Toyota's "youth" brand.

Hollis said fluctuating gasoline prices also proved the broadness of Scion's customer base. "We weren't sure" how last summer's record-breaking gas prices were going to affect Scion sales, but the rising prices, if they did bring more consideration for Scion, may have been offset by other market factors. He said fuel economy continues to be a lower-priority reason indicated for purchase by Scion buyers.

Going into 2009 -- in June, the brand marks its fifth anniversary -- Hollis is confident Scion is functioning as envisioned: he says 74 percent of buyers are new to the Toyota family, a figure that increased 1 percent.

"In that sense, I would say the year was very successful," he said, adding that some 55 percent of Scion owners stay in the Toyota family for their next purchase.

"That's really a pretty incredible story," Hollis said, saying the brand had sold some 700,000 units thus far.

Hollis, who issues Scion statistics at will, presents another rather remarkable one: not a single dealer was lost in 2008 -- and no dealer has left the brand or gone out of business since Scion's inception. The brand started with about 600 dealers; the number stands at 983.

But, he said, Scion could use more product. Even at a time when many brands are pulling in their plans for expansion, he says Scion needs to expand. Currently the brand has the comparatively new xB and xD models, and the aging but still reasonably strong tC coupe.

"A fourth product would be fantastic," he said. "It's our company's belief we need to expand our lineup."

Considering the disruption of buying trends in the U.S. market, what that product could, or should, be seems up for conjecture.

"What are the youth of today looking for in a car?" Hollis asked rhetorically. He said it could be about the "next level" of onboard communication/infotainment capability.

Despite industry conjecture the brand could branch into hybrids or even crossovers (a la BMW's Mini), Hollis said only, "Our goal is to look at the interior of the car," without providing a further indicator for where Scion is going -- or if and when it's going -- for a fourth model.

Photos by Toyota

Scion xD was sought by an increased number of older customers as gas prices skyrocketed last year.

 

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