Thursday, February 11, 2016

The Last Days of Scion: A Dealers Perspective

In January of 2016 our Toyota of Tampa Bay store sold 22 Scions (about 8% of our New Car Volume). While that doesn't sound like a lot, we have new car franchised dealerships that play in the same relative ballpark of volume here in Florida (MINI, Buick, GMC, Mitsubishi). So was it a surprise that the Scion nameplate is going away? In many ways yes, but to a great degree it's just the right thing to do. I've seen the media misrepresent this event in their typical fashion ("Millennials are less interested in owning cars, Toyota says" Las Vegas Review Journal) and I felt that my thoughts would paint a picture closer to reality for all concerned. From a dealers perspective and a Scion owner's it's not all positive news but there is a silver lining here. 

First Impressions
Sitting in the showroom of our first Morgan Auto dealership I remember my first impressions of the Scion brand in 2004: Funky, simple to configure, no haggle (pure price) and hell bent on offering a quicker more streamlined process of car buying to the consumer (something dealerships still struggle with 11 years later). The target was younger buyers and I thought Toyota's approach was positive and proactive. Not every Scion model appealed to the target Generation X/Y consumer (xB for example) but overall the Scion brand did its job of bringing first time customers into the Toyota umbrella (70% of Scion buyers were Toyota first timers). Over the next five years I watched as Honda customers got older and Toyota's younger. Scion was a part of solving a challenge that some of Toyota's competition struggled with. 

What Scion did for Toyota
No one wants to know their average buyer's age is growing each year. Acquiring a consumer and creating brand loyalty inside of the 25-34 demo is a huge achievement in retail especially when you have more mature models to bring them into later in life (Camry, Prius, Highlander, Sienna). Plus who wants the stigma of being the most driven car on the Senior PGA Tour (think Buick, Lincoln)? We used to have Scion meetups at the dealership. Scion gave us the right to enjoy the car rally element that only exotic buyers and classic car owners enjoyed. It was always a positive talking point. Their concept models were outlandish and progressive. Then it all just seemed to go away. 

Flyer from a 2008 Scion Event at Toyota of Tampa Bay "Wicked Whips 2.0"

The Beginning of the End
Around 2009 sales began to decrease and the excitement for the brand dropped to a whisper. New Scion models didn't ignite the passion they first had and Toyota annual meetings were spent with mentions of rebooting and revitalizing the brand. Scion tC (Scion's volume model) sales fell in half. The crossover SUV segment was growing and Scion didn't have a dog in that fight. Even the fabled Toyota 86, which became the rear wheel drive Scion FR-S (great car/right price) couldn't bring back the brand. Scion had fallen into a niche and lost all aspirations of regaining growth and of becoming a "2nd dealership" for Toyota dealers. 

What is Actually Happening / Which Scion models are staying with the Toyota brand?
All Scion models will fold into the Toyota brand in 2017 save for the Scion tC which had previously been slated to be discontinued in 2016. So the Scion iA, iM and the FR-S will soon have Toyota badging. Even the Scion CH-R crossover concept will honor it's reported release but as a Toyota model instead. A Scion owners service relationship with their Toyota dealership should remain virtually unchanged. This is good news ultimately for everyone. While I do believe Scion helped bring younger buyers to Toyota over time Toyota was began to do this on their own. It's a challenge to manage two separate brand philosophies under one roof and many elements of the Scion experience are coming to Toyota anyway. 

Is the death of Scion a referendum on "Pure Price?" 
I think to a degree the death of Scion does tell us something about "Pure Price." While the consumer experience is crying out for a new way to engage, interact and ultimately buy from dealers, the appeal of Pure Price within this is overstated. In the past months Toyota has placed a renewed focus on reducing the time it takes to buy a car while encouraging dealers to take advantage of resources that allow customers to do complete a great deal of the purchase from their couch. This is a positive area of investment for dealers. Dealers are re-aligning themselves for this new reality. While there may be generational differences amongst our guests in their level of comfort with negotiation, it is my personal believe that we should trust our customers to be well researched and discerning which can lead to an efficient two way conversation about price.

Scion dealerships need to share in the blame too 
The Scion model of "Pure Price" and delivery within an hour was seldom adhered to by dealers. Competing dealers would use trade allowances, waived dealer fees and free accessories to compromise the element of "Pure Price" and buy consumer favor. Scion as a brand never got a fair look as to the success of this model simply because DEALERSHIPS failed to discipline themselves to it.

Scion: Victim of Its Own Success? 
Ironically Toyota of North America CEO Jim Lentz (and former head of Scion) foretold of this event. "Do you risk alienating the boomer buyer to get to Gen Y?" Lentz told Automotive News in 2002. Scion after all allowed Toyota to market in unconventional ways, breaking ground in event, promotional and social media marketing. "No, it's safer to create Scion and keep the boomer buyer."

He then added, "But in the future, we will have to integrate Toyota and Scion." 

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