Scion Reaching for 100,000 Units

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2004 Scion xA and xB by Bengt Halvorson (6/23/2003)
Toyota’s fashionable youngsters enter the scene.

Sales of the Scion should reach 100,000 units in 2005, Toyota executives believe, as the company prepares to finish the brand’s introduction across the United States.

Scion, Toyota’s new youth brand, has been on sale in California since June 9. Toyota plans to roll it out across the south and east through the winter. Scion won’t reach the Midwest until the spring of 2004, but brand execs are looking forward to entering markets such as Detroit and Chicago where there are substantial pockets of the kind of young people Toyota is hoping to attract with its newest brand, according to Jim Farley, vice president of Scion, who spoke with reporters last week during a visit to Detroit.

By 2005, the first full year in which Scion will be available coast to coast, Toyota believe sales by the new brand should exceed 100,000 units, Farley added.

The story so far

Farley added the preliminary signs from the California market are very positive. Scion dealerships are very busy: they sold 1351 vehicles the first month and about 1500 during July.

The factory in Japan where the cars are built has been adding vehicles and overtime to its production schedule as a result, and Toyota’s engineering staff is looking for ways to expand production even more. “We’re already short of cars,” he said.

Even in the competitive market where small cars of all kinds are heavily discounted, dealers have become comfortable with the idea of selling the Scion xA and Scion xB for one specific price, Farley said.
In June, the average age of Scion purchasers was 39, Farley said, but 28 percent of the purchasers had a co-signer, which suggests the new brand is finding a following among targeted buyers in their 20s.

Even if the average age of Scion buyers never drops below 30, Toyota still expects its effort to pay dividends, Farley said. “If you aim (your marketing) at 30-year-olds, you are going to get 40s. We’re hoping one in every four customers are in the 20s,” he said.

Moreover, 70 percent of the buyers are men, which is another sign that the Scion is connecting with the target audience, Farley added, and is phenomenal in the compact segment where the majority of buyers are women.

In addition, buyers are also loading up their vehicles, which have a base price of less than $14,500, with more than $1000 worth of accessories. Toyota buyers only order about $300 worth of accessories on average.

Competitive edge

The main competitor for Scion is Honda, whose Civic and new Element have proved popular with young buyers. Mitsubishi appears to have retreated from the youth market because of recent problems with loans and credit for younger consumers.

Farley said Toyota invested in Scion because it was failing to command much attention among younger buyers of Generation Y, which are now coveted by car buyers. By the end of the decade, the younger Americans will be the majority of the car buying public in the U.S.

The introduction of the Scion models in new markets around the country will be preceded by an ambitious advertising program aimed at places where young people in their teens and 20s hang out and shop, Farley said. Scion’s marketing offensive will use wild-looking posters, huge outdoor projections, special print advertisements, and special tie-ins with stores popular with young consumers, he added.
The activity will lead up to test drives, which have proved popular with potential buyers in California where the first Scion models, the xA compact hatchback and xB activity wagon, went on sale in early June.

Of the 4000 consumers who have signed up for test drives, 1100 have asked for information about deals, which is an exceptional number, Farley said.

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