The Scion auto brand has been in turmoil nearly since Toyota introduced it in 2003 as an offbeat line of small vehicles aimed at Generation X and the young “tuner” crowd that “Toyota Classic” wasn’t reaching with its own nameplates. Experimentation was designed into the DNA of Scion.
While Scion has its moments it also has been on a sales roller coaster in recent years, including a 19 percent drop just this year in the midst of Scion’s transition to new vehicles, and as it battles headwinds such as the plateauing of gasoline prices and its lack of any crossover-utility model. It may sell only about 50,000 units this year.
Scion Group Vice President Doug Murtha on stage at the Scion Momentum event to debut the brand-new Scion iA and Sci… pic.twitter.com/Nj5wNcunZa
— SCION (@scion) April 1, 2015
So give Toyota group vice president Doug Murtha the benefit of the doubt when he displays some optimism about where the brand goes from here. Among other things, Scion is rolling two new models this year — the iA, Scion’s first sedan, and iM hatchback — which will replace some retiring nameplates. Murtha also promises another all-new vehicle within two years.
In order to reposition Scion in consumers’ minds, Toyota is refreshing its brand identity. Today’s twenty-somethings and thirty-somethings, the millennial generation, are more pragmatic than Gen X, research shows, and thus more interested in vehicles that are well-designed but also practical. And by and large they aren’t as interested in customization as the Scion buyer of a decade ago.
“We’re having to shift to the evolved priorities and realities of today’s market,” Murtha told brandchannel. Here’s what else he has to say about the outlook for the rebooted Scion.
bc: It’s been tough sledding for you since you took the helm of Scion, hasn’t it?
Doug Murtha: My previous position was in product planning for Toyota, Lexus and Scion, and I came into [the top Scion job] nearly three years ago. I knew we were in for a spell without any new products and with the difficulties of the parent company. We lost out on some timing of new models as Toyota reallocated engineering resources to quality assurance, which everyone supported. So we had to maintain relevance to consumers and dealers anyway. And with the new products coming now and within two years, this is what we asked them to hold out for.
bc: Who is Scion’s target customer now?
Murtha: The mindset of that target has evolved to the more conventional and more mainstream. We’re appealing to the consumer who doesn’t have a ton of disposable income, so there is enough of a market to go after even though we’re all passenger cars in a market where light trucks are the hottest thing.
bc: And what has happened to that twenty-something car buyer as Generation Y has matured? Is there as much interest even in buying cars, let alone customization?
Murtha: There are two takes on what has happened to this generation, one a financial argument and one the conventional argument that they aren’t as interested in cars. As with anything else, the truth probably lies somewhere in between. There’s a little bit of diminished interest in vehicles overall, and diminished reliance on owning them. But there is still strong interest in the independence value of having a new vehicle. We’re just having to shift to the evolved priorities and realities of today’s market.
As far as the tuner market is concerned, the [Specialty Equipment Manufacturers Association] show is still as big as ever. But in terms of subscriptions and followers of hardcore customization publications, for instance, that’s down pretty significantly. There’s still interest in personalizing the vehicle, but the era of bright purple is behind us. There’s still a tuner community there, but it’s no longer the size of when we launched.
bc: So what kind of vehicles are millennials interested in?
Murtha: Our research tells us there isn’t a strong interest in vehicles that are shocking and off the radar. But when they look at the Toyota Corolla, these young consumers say it’s a nice car, but because we sell so many of them, they’re not much interested in that. They want to drive something out of the norm and that is their expression of individuality. They want a dose of of something polarizing in all of our vehicles — and that has been part of our brand from the start — but there aren’t large amounts of interest (by consumers) in going to the end of the quirkiness spectrum anymore.
bc: And how about your dealers, whose patience you’ve sought as they’ve waited for you to fill out the product lineup with worthy new vehicles again?
Murtha: In 2013 we told them we’d understand if they needed to back away from their support of the brand because of lack of product. We were starting to hear from some of them that they hadn’t really bought into our lineup or brand but they were sticking with it just to stay in the good graces of Toyota. So we wanted to make sure that this wasn’t the reason for any of them to continue to participate in Scion. At a dealer meeting we basically said, “If you don’t think it makes sense for you, don’t feel obligated to stay in.”
We did lose a few after that, but we also gained a number of new stores, and net-net our dealer count has changed by only two dealers in that time, and so we still have just over 1,000 dealers. They understand that there will be some rough going ahead. But we’re getting there.