Consumer Insights

Where Did Toyota And Scion Go Wrong?

When brands try to market specifically towards millennials, more often than not, the products they put out say more about their internal goings-on than the consumer they’re trying to target. Whether it’s a misconception that millennials flock to anything digital or that they don’t care about customer service, misinterpreting a millennial customer base has led more than a few brands down a rabbit hole of shrinking profit margins.

Now, Scion, Toyota’s millennial experiment, has joined the ranks of the vanquished.

The Japanese automaker announced Wednesday (Feb. 3) that it would be discontinuing its Scion brand of value-priced cars immediately. In an attempt to spin the decision, Toyota Motor North America CEO Jim Lentz claimed that the end of its millennial-focused brand should open up more opportunities for the main brand in the future.

“This isn’t a step backward for Scion; it’s a leap forward for Toyota,” Lentz said in a statement. “Scion has allowed us to fast track ideas that would have been challenging to test through the Toyota network. I was there when we established Scion, and our goal was to make Toyota and our dealers stronger by learning how to better attract and engage young customers. I’m very proud because that’s exactly what we have accomplished.”

Naturally, plenty disagreed. CNET reported that Scion had sold just 56,000 vehicles in 2015 — a year of sales matched by just two months’ worth of Toyota Camry purchases. That number is also a far cry from Scion’s equally distant heyday. In 2006, the brand-within-a-brand saw 173,034 of its vehicles drive off the lot.

What happened in those nine years to make Scion an unviable brand for Toyota, a conglomerate one might think capable of stomaching a subsidiary showing moderate sales? Forbes explained that the critical flaw in Scion’s long-term development was an overtly simple one: lack of engagement. In 2012, Scion released the FR-S, a two-door sedan priced around $25,000. However, the brand didn’t get a single new model to market until Q3 2015 when it released its iA and iM coupe and hatchback.

Missing out on three years of market presence didn’t just hurt Scion through lack of sales; those years saw a resurgent automobile market and continued economic recovery from the 2008 financial crisis. With millions of millennials coming of driving age each year during that period, there was very little brand presence from Scion for them to engage with — or even realize it was still around. According to Stephanie Brinley, analyst at IHS Automotive, it was this negligence of product development that started leaking water onto the boat before Toyota realized it couldn’t bail it out.

“It failed because it wasn’t supported the way it should have been,” Brinley told NBC News. “It needed constant product and attention to keep moving.”

While the Scion name might be dead, Toyota still has to decide what to do with all of the unsold models it currently has. CNET reported that the automaker plans on scrubbing them of all identifiable brand characteristics and repacking the vehicles as Toyota products — a move that Brinley thinks might actually lead to more sales than had Toyota tried to sell them under the Scion name alone.

“The resources that Toyota had been allocating to support the Scion brand can be brought to bear with the Toyota brand, with impact likely greater than the input,” Brinley told CNET. “Toyota has a broader audience than Scion did, which inherently means a broader pool of potential consumers.”

If the Scion brand lives on with a different paint job, a different logo and much different connotations than what its non-existent consumers had grown familiar with, is it even the same brand at all?

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