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Toyota is scrapping its youth-oriented Scion brand

Sayonara, Scion.

Toyota Motor Corp. has pulled the plug on its edgy, youth-oriented nameplate. As of August, the Scion brand will be gone.

The Japanese car giant characterized the news as the end of a triumphant period in which the quirky, inexpensive Scions brought new customers to the brand.

But those Generation X customers have grown up, Toyota said, and are willing to pay higher prices for better cars.

“We could not have achieved the success we have had without the incredible support of Scion's customers, dealers and team members, so supporting them throughout this transition process will be one of our top priorities,” said Jim Lentz, the executive who began Scion and later rose to chief executive of Toyota's North American operations. “This isn't a step backward for Scion; it's a leap forward for Toyota.”

Kelley Blue Book analyst Karl Brauer said the decision to terminate a still-viable nameplate was notable and rare.

“We're used to seeing domestic brands like Mercury, Oldsmobile and Plymouth die,” Brauer said. “But this is the first time a U.S.-specific brand, launched by a successful Japanese automaker, has been killed.”

The 2003 creation of the Scion line was a big step for Toyota; the separate division was an attempt to reach buyers turned off by the Toyota name.

In the early 2000s, company executives said Wednesday, research showed that Gen X buyers perceived Toyota as dull and undesirable. Gen Xers are generally defined as people with birth dates from the early 1960s to the early 1980s.

“The Gen X buyers were speaking very loudly, and their attitude toward mainstream brands was taking a divergence from their boomer parents,” said Toyota Senior Vice President Bob Carter. “We created Scion to attract those young buyers.”

Younger consumers were attracted by the boxy Scion design language, by Scion's ability to be personalized with aftermarket accessories and by the vehicles' low prices. The bulk of the Scion lineup costs $20,000 or less.

They also liked the brand's creative financing options. Scion owners could take advantage of the “Pure Pricing” policy, which fixed the cost of each vehicle at a set, no-haggle point. They could also opt for the “Service Boost,” a prepaid maintenance plan.

California got the first Scions, the 2004 xA and xB. With their large cargo areas and better-than-average sound systems, they proved popular. Toyota, the world's largest automaker, said it had sold 1.1 million Scions during the brand's 2003-15 life span. The top sellers, accounting for about three-quarters of all sales, were the xB and tC models.

Some Scions will become Toyotas, starting with the 2017 model year, including the FR-S sports car, iA sedan and iM hatchback. The new C-HR crossover concept, once thought to be a coming Scion, will get new life as a Toyota. But neither the xB nor the tC will return under the new arrangement.

Carter called Scion a “laboratory” for testing the youth market, and pronounced the tests a success. A full 70% of Scion buyers were new to the Toyota family, he said. About half were under age 35, and 40% were first-time new car buyers.

As Gen Xers aged, got married and had children, though, their tastes and automotive needs changed. “We all have to grow up,” said Scion Vice President Andrew Gilleland.

By then, however, a substantial percentage had migrated from Scion to Toyota, Carter said. And the millennials who followed them did not share their antipathy to the Toyota brand. The company said 27% of its 2015 Toyota car sales were to young people in that demographic.

As Toyota sales rose, Scion sales fell. Analysts said that was in part due to lower gas prices, which make small cars a tougher sell in a market that prefers trucks and SUVs. It may also have been an unintended result of Scion's reputation as a “cheap” Toyota.

The company said Scion sales dropped from a high point of 173,000 vehicles in 2006 to only 56,000 in 2015.

Carter said the reports of Scion's death were premature, because Scion models will live on under new names. He likened the nameplate's transition to Toyota's earlier discontinuations of the Celica and Supra models.

Other observers said the end of Scion was similar to that of GM's subsidiary Saturn — though Scion never had dedicated, stand-alone dealerships, as Saturn did.

charles.fleming@latimes.com

Copyright © 2016, Los Angeles Times

UPDATE

5:54 p.m.: Updates with additional details and background

Originally posted at 7:18 a.m.

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