Toyota Vows to Roll Back Oldometer With New Line
Against a backdrop of pop music unfamiliar to just about anyone older than 25, Toyota Motor Corp. on Wednesday introduced its new Scion line of vehicles, the latest effort by Japan’s top auto maker to reconnect with younger buyers.
Toyota, whose average customer is older than those of Ford, Honda, Nissan or Mitsubishi, is worried that it has lost touch with the segment of the population that will be the biggest group of car shoppers 20 years from now. Hoping to bridge that gap, company executives displayed a pair of compact, toylike concept cars at the New York International Auto Show, to the tunes of bands such as the Rurals, Fauna Flash and Schooly D.
It was a bold announcement on the order of the birth of Lexus or Infiniti, the luxury brands of Toyota and Nissan Motor Co., and the first introduction of an all-new car brand to the American market since General Motors Corp. launched Saturn in 1990.
The Scion launch will be aimed squarely at California, the trend-setting auto market in which Toyota established its U.S. foothold more than 30 years ago. The cars will be sold only in California for the first eight months, starting in June 2003.
“There’s a new group growing up in our world that we don’t know much about,” said Jim Press, executive vice president of Torrance-based Toyota Motor Sales USA. “Today, Toyota is taking a major proactive step to reach out and connect with them.”
To make the point that those who run and write about the auto business are out of touch with today’s youth, Press challenged the several hundred auto executives and journalists present to identify the music, saying, “If you’re like me, you didn’t have a clue. But my 12-year-old daughter did, and your kids probably do too.”
The Scion vehicles Toyota showed at the auto show were a compact, boxy car similar to a mail delivery truck called the bbX, and a sporty coupe called the ccX.
The bbX, on sale in Japan for two years as the bB, has high headroom and a rear seat with ample legroom. A single round dial above the center of the dashboard holds the speedometer, tachometer and fuel gauge.
The ccX has neoprene seats and a mostly aluminum interior, as well as features including a large ice chest that plugs into the car’s power source. It is still a concept car, and Press would not say whether it would join the Scion lineup, but a Toyota source said it is expected to go into production in about a year.
A third Scion will go on sale within 12 months after the brand hits Toyota showrooms. Unlike Toyota’s Lexus division, Scion will not have its own dealerships.
Recent efforts with new brands in the U.S. have generally failed.
GM’s German Opel brand made a short-lived appearance in the 1960s. Ford Motor Co.’s experiment with its Merkur brand was a disaster. GM flagship Chevrolet tried to court the youth market with Geo; its vehicles were made at GM’s joint-venture factory with Toyota, but many consumers just bought the Toyota versions instead and Geo withered away. The same fate met Chrysler’s Eagle brand.
Indeed, Toyota itself has already faced a tough road in reconnecting with America’s youth. In 1998 it set up the Genesis group to figure out how to bring younger buyers to a brand that baby boomers revered for its reliability but the Net generation considered out of style.
Three vehicles--the Echo, Celica and MR2--were marketed aggressively to the youth market by the Genesis group but failed to gain momentum. Celica sales were down 32% last year, and Echo and MR2 sales declined 13% each.
Rival auto makers were puzzled by Scion and said they failed to see the need for an entire new brand to reach out to young buyers.
“If you’ve got a well-respected brand, why not take advantage of it?” said Dick Szamborski, vice president of national sales at American Honda. “I look at Scion and say, why do it? We don’t need to spend marketing money on a new line--we have Honda.”
Jed Connolly, general manager of the Nissan division, said: “If I go into a Sony shop, and they try to sell me a television by ABC, I wonder why? I want the Sony.”
Saturn, which introduced its own car Wednesday--the ION--to court the youth market, says it too can handle Gen-X and Gen-Y on its own.
“We don’t have to create a whole brand to attract a segment of the market that’s already well aware of us,” said Jill Lajdziak, Saturn’s vice president for marketing.
But some experts said Toyota’s scheme might work. After all, its Lexus division took only a decade to race past every other luxury brand to become the best-selling premium marque in the U.S.
“If you look at Toyota over the last 20 years, they’ve been the most successful auto company around. I find it tough to argue with any route they go,” said Michael Ward, Salomon Smith Barney’s chief auto analyst. “I don’t see how anybody could bet against them.”
If anyone could do it, “it would be Toyota,” Nissan’s Connolly said. “They have a lot of models and complexity, and maybe they see the opportunity to subdivide.”
Toyota says it sees the opportunity to tap into Gen-Xers, ages 23 to about 36, and the 7- to 22-year-olds of Gen-Y. Last year, those of Gen-Y age bought 400,000 vehicles in the U.S., but as more members of that group reach car-buying age, that number will balloon to 4 million in 2010 and 6.5 million in 2020, said Scion Vice President Jim Lentz, 46, who will spearhead the brand.
Toyota has been working on Scion for about three years, said Yoshi Inaba, president of Toyota Motor Sales and the one Press credited as the driving force behind Scion.
“I felt we were losing out in attracting trendsetters. That was our weak point,” Inaba said.
The Echo, which was intended to bring down the age of previous Tercel buyers, actually raised it, he said.
But Scion’s strategy is different as it targets even younger buyers. Scion customers will come from among people who don’t even have driver’s licenses yet, Inaba said, adding that he expected the cars’ demographics to be close to those of Volkswagen’s popular Jetta.
That would be just what Toyota needs. Owners of VW’s Jetta, Golf and GTI are 37 or younger on average, but the only Toyota vehicle that has an average buyer age of under 40 is the Celica, at 38, according to J.D. Power & Associates.
Scions, which will be built in Japan and shipped to the port of Long Beach, will be sold only in California Toyota dealerships until February 2004, when sales will expand nationwide.
By 2005, the first full year nationwide, Toyota expects to sell about 100,000 Scions.
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