Toyota North America CEO Jim Lentz continues to advocate for Scion becoming a brand of small-premium cars.
“I still personally believe small-premium is the direction we should be going,” he tellsWardsAuto in a recent interview here during a Toyota press event. “I think that (the) Toyota channel, itself, with vehicles like Yaris and other small, B-platform cars, can handle the lower end of the market. I think that C-platform premium small cars are probably the best place for Scion to be.”
The positioning also makes sense as Toyota’s Lexus luxury brand has said it won’t sell a model below $30,000, bucking the trend of other premium automakers offering models below that price point (Mercedes-Benz CLA, Audi A3).
However, Scion has said the upcoming production version of the iM concept displayed at the recent 2014 Los Angeles auto show will begin under $20,000.
“We’re still going after a younger audience. We still need that attainability factor,” Scion Vice President Doug Murtha tells WardsAuto in a separate interview in Los Angeles.
Murtha doesn’t disagree with Lentz’s desire for a small-premium model lineup, but says, “He may be having discussions at levels I’m not.” Also, Scion currently is planning for the ’17-’25 model years.
“If he’s able to somehow lobby to take the brand in a new direction, that’s probably a longer-term proposition than we’re looking at right now,” Murtha says.
The production version of the iM, a compact hatchback based on Toyota’s European Auris model, will be unveiled at the 2015 New York auto show in April and is one of three new models Scion is planning to launch in three years.
Murtha is mum on what the others may be but acknowledges the size of the brand’s lineup will be fluid, ranging from four to possibly seven nameplates.
Today, Scion offers five models: the iQ minicar, xD subcompact, xB box, tC coupe and the rear-wheel-drive FR-S sports car. Some of those models will depart, but Murtha won’t say which ones are on the chopping block.
His predecessor, Jack Hollis, told WardsAuto in 2012 the xB and xD would be discontinued.
When asked if he’s surprised by how successful Kia has been with the xB competitor Soul, Murtha says the Korean brand is targeting a different buyer than Scion’s xB, and applying a lot more marketing muscle, too. “They’re clearly investing in it in a big way,” he says. “They’ve positioned it competitively, to their credit. It’s a pretty good value in the market.”
Murtha is hopeful Scion will receive the necessary marketing dollars to launch the production iM and other future new models, although he’s not counting on a Kia-like budget.
“We’re going to expect we get the bump in our marketing budget, beyond just the sustainment level,” he says. “In a way, I’m not sure the Kia comparison is really fair because they are something closer to a full-line manufacturer.”
As for possible future segments, Murtha says green cars and a small pickup remain off the must-do list, either due to lack of desire among young car buyers or weak profitability.
Scion’s research continues to show that while young buyers have a strong interest in all things environmental, “as soon as you attach a price tag to it, they’re out.”
Sales of the relatively affordable Toyota Prius C subcompact to an older-than-expected buyer “just reinforces that end of the market isn’t demanding anything that’s not already available to them,” Murtha says.
The realities of the U.S. “chicken tax,” a stiff tariff slapped on imported light trucks, make a small pickup a no-go. All Scions currently sold in the U.S. are built in Japan.
“Unless we can create enough volume within North America to justify bringing production here, you’re going to face a 25% tariff bringing that in from anywhere overseas, and it’s impossible to make a business case for that.”
However, a light truck in the form of an SUV or a CUV is being considered.
“I wouldn’t rule out a utility vehicle, if I think there’s something appropriately Scion-esque,” Murtha says.
Scion still is aiming for 100,000 annual sales in the U.S., a volume necessary for the brand’s U.S. dealers to be profitable.
But sales this year have gone, disappointingly, in the opposite direction, Murtha says.
The 50,285 units sold through October are 14.8% below year-ago’s 59,030.
“I think we had hoped to begin re-engaging dealers before the new product arrived and hoped through some additional focus on their part, we’d be able to get some more out of what otherwise was an aging lineup, and I think some of those efforts didn’t necessarily pan out,” he says.
However, Murtha is confident Scion does have its dealer body’s “attention,” as they’ve seen coming new product and “realize if we don’t hit the ground from a standing start when those new products arrive, we’re not going to make the most out of them.”