Filed under: Economy, Marketing/Advertising, Scion, Toyota
Scion promises fewer sales in 2007
For the first 255 days of 2006, Scion sold more than 151,000 cars. Next year, the youth-oriented brand plans to sell even fewer. The Wall Street Journal reports that Toyota plans to limit its youth brand's sales to a year-long total of only 150,000 vehicles next year. Toyota hopes that by keeping Scion a hard-to-obtain product, the brand can retain some of its underground coolness. Hmmm... that's the same kind of strategy used by brand's like Bentley to keep its car's ultra exclusive.
Limiting sales is a pretty big gamble for any brand, but is an especially big gamble for one selling essentially economy cars that most other carmakers sell at a loss. Add in the two new models Scion will have on lots next spring, and the stakes climb even higher. Only a company with pockets as deep as Toyota could run such a marketing experiment without much trepidation.
To further enhance that can't-have-it appeal, Scion is expected to move away from advertising on the "too mainstream" MySpace and instead focus its online efforts on Secondlife. Scion may also totally shun TV advertising, though its TV presence was limited to begin with. It's a novel way to pitch cars to the ever-elusive youth crowd that could just be crazy enough to work.
[Source: The Wall Street Journal via Inside Line]
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Reader Comments (Page 1 of 3)
Greg 2:08PM (11/12/2006)
I don't know, during 'Entourage' last season ... they had a skit involving Turtle pursuing a limited run of a brand of Sneakers, everyone wanted a pair but they were hard to get.
This explains why my local Toyota dealer never really has any Scion's in stock.
It's actually an interesting concept.. X amount of Units sold equates to X amount of Expectated profits.. so technically if you limit your expectations, you eliminate failure of reaching your sales goal.
The SecondLife thing though,,, man that is a bold move!
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Petey 2:08PM (11/12/2006)
Its a bit insane that a start up brand is catching up to Mazda (about 250-280k/year) in terms of annual sales so quickly.
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Brooksie 2:14PM (11/12/2006)
That's the stupidest strategy I've ever heard.
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James 2:37PM (11/12/2006)
I would have to agree with the opinions of the strategy. My wife has a 2007 Scion tC and loves it - but she did have a hard time finding one with all the options. Dealers either had none, or models with only limited options. Scion itself has the "cool" factor due to all the available dealer options and customizations. I personally would think that is enough to keep the brand in with the "cool" crowd. I would much rather see Scion available with MORE options and accessories, letting people compare how they ordered their vehicles, then to see them in lower numbers. Larger numbers in sales will also support the aftermarket industry to produce even more products for the Scion brand.
My guess is the 150K limit is predicted only because of the change in models coming next year (with no 2007 xA or xB). Perhaps in 2008 they'll have much larger numbers as the brand continues to grow.
James
http://www.CarTV.com
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Brian W 3:13PM (11/12/2006)
It's called why make a lot of cars that we don't make a lot of money on. Plus by limiting the number, they keep the transaction prices up. Not to mention the quality isn't very good.
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Casey 3:18PM (11/12/2006)
It is worth noting that the xA and xB replacements arriving next year will probably grow in size and content, and will likely be more expensive. I'm sure the arrival of the Yaris, which has been very successful, has had an impact on Scion's sales projections, and occupies the rock-bottom price niche that the xA used to fill.
Keeping the brand exclusive is vital to Scion's longevity and success as a brand, although it seems that lower sales will come naturally with the evolution of the Toyota product line.
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TG 3:20PM (11/12/2006)
Brooksie - you must be a Democrat
The strategy works, especially for kids. Look at what BMW has done for the Mini Cooper. Those vehicles damn near cost more used than new..........why......because it takes forever to get them new and no one want's to wait for a car.
I think it's smart. Toyota knows that it's market share is doing nothing but increasing. If their cars are satisfying adults and children alike, reducing production will maintain the "must-have" factor and stabilize prices.
Or, ask Chevy about their Colbalt SS supercharged, which is faster, handles better, costs less, but has less demand for some reason? Could it be brand image.
I know BMW has it. I know Mini has it. And I know Toyota has it. GM nope
The closest car that competes with the Scion is the Civic/Fit/Element products from Honda. A funny thing about Honda is......they are at full capacity, they can't build anymore cars. They basically sell as much as they build, which may increase their sales a small amount, but not substantially.
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Ben 3:44PM (11/12/2006)
"Not to mention the quality isn't very good."
Hey Brian, the xB just came in second best in reliability in its class according to CR.
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toodaloo 3:59PM (11/12/2006)
TG -- funny, from those 7 words, I didn't think Brooksie seemed intelligent enough to be assumed a Democrat. I don't think it has so much to do with creating demand and exclusivity to stabilize prices, I think there is a much larger and more profitable scheme in play. By increasing the cool factor for young buyers, the brand itself becomes valuable and becomes lucrative for other companies to buy into -- all the companies that invest millions trying to "tap into the youth market" can then co-brand with Scion instead.
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joshj 4:11PM (11/12/2006)
perhaps my 05' tC will become a novelty item :)
ok all kidding aside, I think it's an interesting idea. theFacebook did the same thing when it started, same with orkut, even the iPod....
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Stphane Dumas 4:22PM (11/12/2006)
Ben, maybe Brian confused it with the recent recalls of the tc model.
It could be interesting to see if in 15 or 20 years when we might found Scions hidden in barns or scrap yards wondered if they could be highly collectible and having some future articles in old car magazines like Hemmings Motor News and Collectible Automobile around the years 2020-2025? Will they have an high collectible value like the Nissan 350Z, Mitsu EVO, Subaru WRX, Mazda Miata/MX-5 and RX-8 or classifield as "cheap wheels" in a future issue of Collectible Automobile?
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Steve 5:45PM (11/12/2006)
Pinch me, I still can't believe any one with a penis would want one in the first place. Just get a V6 mustang and have a real car. There in something wrong in the universe when a Mazda 3 can't sell 3 times as many cars as Scion in the first place. Go figure....
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?? 7:57PM (11/12/2006)
I heard from a dealer is that Scion was originally an idea to being in people that would have NEVER even considered a Toyota(Mom and Dad's cars).
Even some older buyers, of say Mazda or Nissan, etc... have been in and pruchased tC's, vs Mazda 3's ,SE-Rs etc.
They -Toyota- Supposedly, aren't making a whole lot of $$$ on these(I read elsewhere, they make enough worldwide ont he cars that Scions are based upon to be "icing on the cake" for U.S. Sales).
Who knows?
We have an 05 Scion, the dark blue color that is now not available anymore.
We have nearly 70,000 in 26 months(yes, that's correct, 70K).
Great car, but,--- and with the automatic(and nothing else) at 17,199, they Still made(dealership) nealry 800 dollars over invoice(no arguing, you know, the "Saturn" type of deal).
I dunno. Toyota gets more for their cars than anyone else outside of Honda(invoice to MSRP- actual transaction prices, after "arguing" prices down, rebates, whatever).
I think it is a stupid idea( how many other makers say" I want to LOWER my sales").
Oh well, give Suzuki a chance w/ their new (*great) sx4, and other updates(like they did SX4 over Aerio: BIG DIFFERENCE) to compete, then,if others want little cars for not much cash.
About not many cars on the lot/ that's odd./ I saw 2 different dealerships , one near dayton ohio, one north of cincy.... both were full.... 10-15 tc's, 15-20 xb's and 10-15 xA's. All colors.
Who knows? Toyota is a trip.
I know one girl got a new Corolla over a tC(i had ours in for tune up), and she said"the tC is too manly"(there ya have it, for the people who used to call it a secretary's car, the older crowd).
Her mom and dad were with her( they kpet coming back to the waiting room to talk between them, and aI was there, allong with others).. The father liked the tC, the mom said nothing, and she ended up with the Corolla.
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ramsport47 8:41PM (11/12/2006)
you guys all know that they sell Scions as Toyotas elsewhere in the world...right? Plus...Consumer Reports??? like I would believe anything they have to say
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apt34 8:54PM (11/12/2006)
The intellegence of certain people here truly amazes me.
1) The xB is indeed a box. What is wrong with that? Are they an "idiot" for buying a cheap car that gets great mileage? Are you just afraid of people who don't mind being bold with their style?
2) Scions are USDM-only. You can't even get them in Canada except in a few instances or import.
3) Sit in a cheap domestic (or even a Nissan) and then come back and sit in a Scion. I don't think you'll be complaining about low quality anymore.
4) The Scion brand was not intended to make Toyota crazy amounts of money. It was designed to recapture the wandering youth segment of the market - and Toyota succeeded, greatly. There are many lifelong Toyota customers now. Not every business thinks of everything in terms of immediate profit. Perhaps you do, but Toyota is a little smarter.
It's sad to see some people are so insecure about themselves that they feel they need to stereotype people who buy Scions. Oh well, at least we can "go around corners" ;)
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Yvo 10:24PM (11/12/2006)
Well said apt34.
I own a 2007 Scion tC and frankly am happy to see this. It'll just make me want to take care of my car more and in a few years when its time to move on to something else that the resale value will be fantastic.
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Howard Kerr 10:33PM (11/12/2006)
Re apt34,
For the most part you are correct. However, Scion, the brand ,is USDM but the cars are not all exclusive to the U.S. market. The xa and xb are sold in other markets as Toyotas, the tc is a U.S. exclusive, but is exclusive in that it's a body style not sold in other markets of a car sold in other markets. The tc is based on the Avensis, sold in Europe as a 4 door sedan and as a 5 door wagon. The Avensis is available overseas with a 4 cylinder turbo-diesel, and with a couple of 4 cylinder gas engines...all are smaller in displacement but rated at more power than the 2.4 used in the U.S. market tc.
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Rob 10:49PM (11/12/2006)
Stephane-
There has only been one recall of the tC. It only affects models with side airbags. The other incident was a service bulletin (and because of that bulletin Scion sent out diecast models of a tC to each owner affected for free...don't see any other company doing that) for their customers.
Steve-
A V6 mustang? My supercharged tC is probably pretty comparable to that.
I'm glad they're keeping the production limited. It means my car will hold its value. Kudos to Scion and Toyota.
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Brennan 11:09PM (11/12/2006)
scion are the ugliest f'ing cars I have ever seen. I appreciate toyota keeping less of them on the road. I also hope this strategy some how forces toyota to go out of business.
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Ben 11:29PM (11/12/2006)
Brennan: Forces Toyota to go out of business?
You have got to be kidding me. Toyota can afford to throw a few billion at the wall and see if it sticks. Scion stuck.
I am thinking that this corporation knows a little more about making and selling cars than the average Brennan out there.
I have heard many times that this brand is not all about making money. It has been called an experiment by some of the higher-ups at Toyota. If it breaks even but gets that loyalty in a younger crowd, Scion is a resounding success. If it happens to become so sought after that they decide to limit production rather than have it limited by the market, well then that makes Toyota VERY happy.
Based on what I see with so many people buying multiple Scions, and moving to Yaris and such, Toyota has gained that brand loyalty.
Domestics WISH they could have a Scion.
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