Toyota Plans Scion Overhaul as Youth Brand Hits Adolescence

Toyota Motor Corp. (7203)’s Scion line, a U.S. experiment intended to win over young buyers with idiosyncratic designs and low prices, will overhaul its lineup amid fading sales as the brand reaches adolescence.

Beginning in 2015, 12 years after Scion’s establishment as Toyota’s third U.S. brand, the company will introduce the first of three new vehicles, Doug Murtha, vice president of Scion sales, said yesterday in an interview at the New York International Auto Show. While Scion will continue to offer about five different models, Murtha declined to say which current products will be discontinued.

“Beginning in November in Los Angeles, we’re going to show the first of three new products that will come to market within a 24-month period,” Murtha said. “Beyond that, there are no real specifics on what’s going to sunset and what’s going to stick around.”

Scion sales surged after the nameplate’s introduction across the U.S. in 2003, peaking three years later at 173,034 units. Deliveries of xB wagons, xD hatchbacks, and tC and FR-S sport coupes shrank to just 68,321 last year. That’s the result of an aging model line and more competitive offerings from General Motors Co., Ford Motor Co. (F) and Hyundai Motor Co.

Photographer: Andrew Harrer/Bloomberg

The Toyota Motor Corp. Scion iQ vehicle is displayed at the Washington Auto Show in Washington, D.C. Close

The Toyota Motor Corp. Scion iQ vehicle is displayed at the Washington Auto Show in Washington, D.C.

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Photographer: Andrew Harrer/Bloomberg

The Toyota Motor Corp. Scion iQ vehicle is displayed at the Washington Auto Show in Washington, D.C.

The xD and xB, introduced in 2007, are among the oldest products in Toyota’s U.S. lineup, and the iQ minicar added in 2012 didn’t replicate the sales success it had in Japan and Europe. A recent bright spot is the rear-wheel-drive FR-S coupe introduced in 2012 that’s drawn “tuners” and performance-oriented customers to Scion, Murtha said.

Selling Mazdas

Starting in 2015, Mazda Motor Corp. will begin supplying Toyota with a subcompact car based on the Mazda2 hatchback. Murtha declined to say whether that model would be sold in the U.S. as a Scion.

“That’s definitely a scenario. Obviously, something in that product category would be a candidate for us,” he said without elaborating.

While Scion volume may not return to its 2006 peak, Toyota is committed to continuing the brand, Murtha said.

“There’s been a little wait involved,” he said. Still, the new products show “the company’s commitment to not be done with the experiment, to put some resources behind it and continue what we started 11 years ago.”

The Toyota City, Japan-based company’s American depositary receipts fell 0.4 percent to $108.02 at the close in New York. They have declined 11 percent this year.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net Niamh Ring, Stephen West

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