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The Toyota Division posted January sales of 102,565 units, a decrease of 34.9 percent from last January. The Lexus Division reported January sales of 14,722 units, a decrease of 30.3 percent from the year-ago month.

Toyota Division

Toyota Division passenger cars recorded January sales of 60,017 units, down 30.8 percent from the same period last year. Passenger car sales were led by Camry and Camry Hybrid, which posted combined sales of 20,782 units. Corolla recorded sales of 19,238 units. Yaris reported sales of 4,440 units for the month. The Prius mid-size gas-electric hybrid posted January sales of 8,121 units.

Toyota Division light trucks posted January sales of 42,548 units, down 40 percent from January 2008. Light truck sales were led by the RAV4 compact SUV with January sales of 8,034 units. The Tacoma mid-size pickup reported sales of 7,619 units for the month. The Tundra full-size pickup reported monthly sales of 7,076 units. Highlander and Highlander Hybrid posted combined sales of 5,757 units.

Scion Division

Scion posted January sales of 3,923 units. The xB urban utility vehicle led the way with sales of 1,715 units. The tC sports coupe recorded sales of 1,241 units.

Lexus Division

Lexus passenger cars reported January sales of 7,246 units, a decrease of 37.7 percent from January 2008. Passenger car sales were led by the ES entry luxury sedan with January sales of 2,971 units. The IS entry luxury sport sedan reported combined sales of 2,400 units. The LS flagship luxury sedan reported combined sales of 904 units. The GS luxury sport sedan reported combined January sales of 898 units.

Lexus Division light trucks recorded January sales of 7,476 units, down 21.2 percent from the year-ago month. Lexus sales were led by the RX luxury utility vehicle, which posted combined January sales of 6,520 units. The RX 400h hybrid luxury utility vehicle reported sales of 1,556 units for the month.

TMS Hybrids

TMS posted January sales of 11,876 hybrid vehicles. Toyota Division recorded sales of 10,246 hybrids for the month. Lexus Division reported January sales of 1,630 hybrids.

There were 26 selling days this month, compared to 25 selling days and last January.

Scion xA
January 2009: 0
January 2008: 9
% Change: -100

Scion xB
January 2009: 1,715
January 2008: 3,319
% Change: -50.3

Scion tC
January 2009: 1,241
January 2008: 2,947
% Change: -59.5

Scion xD
January 2009: 967
January 2008: 1,597
% Change: -41.8

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Toyota finished the year with sales of 1,957,575 vehicles, while General Motors Chevrolet sold 1,801,131 vehicles to American customers last year. Toyota nosed out Chevrolet even after the 113,904 vehicles sold under the Scion name plate were subtracted from the Japanese automaker’s totals. Chevrolet and Ford had been the best selling nameplates for the past century.

For the full-year, car sales, which were estimated at 13.5 million units, also finished the year down 17 percent and at the lowest ebb since 1992. The Ford F-150 pickup truck, however, was the best-selling vehicle in the U.S. for the 27th year in a row. It was also the 32nd year in a row that the F-Series was the best selling truck in the U.S.

“Our thanks go out to our customers, our dealers and, of course, the Ford employees and supplier partners who design, engineer and manufacture quality, fuel-efficient trucks delivering unmatched capability,’ said Jim Farley, Ford’s group vice president, marketing and communications.

George Pipas, sales analyst for the Ford Motor Co., estimated that passenger cars outsold trucks, sport utility vehicles and minivans for the first time since 2000, reversing more than three decades of decline in the popularity of traditional passenger cars.

Truck sales appeared to make a very modest comeback during the fourth quarter at least in part because fuel prices had dropped and truck buyers had better access to credit than buyers of more fuel-efficient vehicles. However, Pipas also said the shift to passenger cars appeared very well established.

The sudden drop in sales during the second half of 2008 also left every carmaker selling vehicles in the U.S., with the exception of Subaru, reporting a drop of sales for the full year.

Two of the biggest and most painful declines in 2008 were recorded by GM and Chrysler.

GM reported a 35 percent sales drop in December and a 27.5 percent decline for the year, while Chrysler sales fell 53 percent in December and by 30 percent for the year. Ford saw its sales decline by 32 percent in December and by 20 percent for the year. Toyota’s sales dropped 37.5 percent in December despite an advertising and incentive blitz and 15 .7 percent for the year.

Honda also reported a 34.7 percent decline in December but a modest 8.2 percent decrease for the year, while Nissan’s sales fell 30 percent in December and by 11 percent for the full year.

In tough economy, smart USA exceeds sales goals

In a very tough year for carmakers, Bloomfield Hills-based smart USA exceeded its sales targets. For December, smart USA, which is a partnership between Daimler AG and Penske Automotive Group of Bloomfield Hills, recorded 2,341 sales. With year-to-date sales for 2008 at 24,622 units, smart USA surged past its sales objectives in its first year of business in the U.S. market. The total sales exceeded smart USA’s original projection of 20,000 units during what proved to be the auto industry’s worst year since 1992. The strong sales of smart USA also helped Daimler mitigate the drop in sales at Mercedes-Benz USA, which had dropped 11.7 percent. Overall, car sales dropped 35 percent during December and by 17 percent for 2008.

Daimler officials also said the smart for-two offers a combination of outstanding fuel efficiency, innovative safety features, environmental friendliness and excellent value. The smart for-two, finetuned by BRABUS, a specialist in tuning Mercedes vehicles, will go on sale in the United States later this month. There are currently 74 smart centers open in 35 states. Daimler also plans to show off an all-electric version of the smart car during the North American International Auto Show next week in Detroit.

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Toyota Division recorded year-end sales of 1,957,575 vehicles, down 14.9 percent from the prior year. Lexus reported sales of 260,087 units in 2008, down 21.2 percent from 2007. Scion Division reported sales of 113,904 units for the year.

TMS reported December sales results of 141,949, a decrease of 36.7 percent from the same period last year.

“Our New Year’s resolution is to shift the focus back to where it belongs, to the consumer,” said TMS President Jim Lentz. “The sooner stimulus efforts find their way to where they’ll do the most good – into the hands of consumers – the sooner we’ll see a turnaround in confidence levels and a return of buyers to the marketplace.”

Toyota Division

Toyota Division reported December sales of 118,587 units, down 37.5 percent from December 2007. Toyota Division passenger cars recorded December sales of 67,717 units, with year-end sales of 1,207,006 units, down 8.4 percent from last year. For the year, passenger car sales were led by Camry, which posted annual sales of 436,617. Corolla posted year-end sales of 351,007. The Yaris subcompact reported best-ever year-end sales totaling 102,328, up 20.3 percent over 2007. Prius recorded sales of 158,884 units for the year.

Toyota Division light trucks reported December sales of 50,870 units, with year-end sales of 750,569, down 23.5 percent from 2007. Light truck sales were led by the Tacoma mid-size pickup, with year-end sales of 144,655 units. Tundra reported sales of 137,249 units in 2008. RAV4 compact sport utility vehicle reported year-end sales of 137,020 units for the year. Highlander and Highlander Hybrid posted combined sales of 104,661 units for the year. The Highlander Hybrid gas-electric mid-size SUV reported sales 19,391 units in 2008. Sequoia reported year-end sales of 30,693 units, up 31.5 percent over the prior year.

Scion Division

Scion reported December sales of 4,127 units. The Scion xB urban utility vehicle recorded December sales of 1,794 units, with year-end sales totaling 45,220. The tC sports coupe reported December sales of 1,348 units, with year-end sales reaching 40,980 units. The xD posted sales of 985 units in December and year-end sales of 27,665 units.

Lexus Division

Lexus reported December sales of 23,362 units, down 32.4 percent from the year-ago month. Lexus passenger cars reported December sales of 11,542 units, with year-end sales of 151,567 units in 2008. Lexus passenger car sales were led by the ES entry luxury sedan with December sales of 5,236 units and year-end sales of 64,135. The IS entry luxury sport sedan recorded combined December sales of 3,539 units and combined year-end sales of 49,432 units. The LS flagship sedan reported combined December sales of 1,451 units and year-end sales of 20,255 units. The GS luxury sport sedan posted combined December sales of 1,200 units, with year-end sales totaling 15,759 units.

Lexus Division light trucks reported December sales of 11,820 units and year-end sales of 108,520 units. The RX luxury utility posted combined December sales of 9,932 units and year-end sales of 84,181 units. The RX 400h luxury hybrid SUV reported sales of 15,200 units for the year. The LX posted yearly sales of 7,915 units, up 219.7 percent over 2007.

TMS Hybrids

TMS calendar-year-to-date hybrid sales totaled 241,405 units. In December, TMS posted sales of 12,201 hybrid vehicles. Toyota Division posted December sales of 10,637 hybrids and year-end sales of 224,547 units. Lexus Division posted sales of 1,564 hybrids for the month and 16,858 units for the year.

There were 308 selling days in 2008, compared to 307 selling days in 2007. There were 26 selling days this sales month and last December.

TOYOTA RETAIL SALES
(INCLUDES FLEET & HAWAII)
December, 2008
	—– CURRENT MONTH —–			– CALENDAR YEAR TO DATE –
			DSR %			DSR %
	2008	2007	CHG	2008	2007	CHG
	4,417	5,477	-19.4	102,328	84,799	20.3
COROLLA	22,129	28,582	-22.6	351,007	371,390	-5.8
CAMRY	25,275	38,831	-34.9	436,617	473,108	-8.0
VENZA	1,474	0	#N/A	1,474	0	#N/A
AVALON	2,436	5,694	-57.2	42,790	72,945	-41.5
PRIUS	7,859	14,212	-44.7	158,884	181,221	-12.6
SCION xA	0	14	-100.0	39	9,547	-99.6
SCION xB	1,794	3,785	-52.6	45,220	45,834	-1.7
SCION tC	1,348	3,507	-61.6	40,980	63,852	-36.0
SCION xD	985	1,638	-39.9	27,665	10,948	151.9
TOTAL TOYOTA DIV. PASS. CAR	67,717	101,741	-33.4	1,207,006	1,313,651	-8.4
ES	5,236	8,005	-34.6	64,135	82,867	-22.9
LS	1,451	3,257	-55.4	20,255	35,226	-42.7
SC	116	348	-66.7	1,986	3,927	-49.6
GS	1,200	2,579	-53.5	15,759	23,381	-32.8
IS	3,539	5,651	-37.4	49,432	54,933	-10.3
TOTAL LEXUS PASS. CAR	11,542	19,840	-41.8	151,567	200,334	-24.6
TOTAL TOYOTA PASS. CAR	79,259	121,581	-34.8	1,358,573	1,513,985	-10.6
SIENNA	6,901	12,350	-44.1	115,944	138,162	-16.4
RAV4	8,795	13,816	-36.3	137,020	172,752	-20.9
FJ CRUISER	3,168	4,079	-22.3	28,668	55,170	-48.2
4RUNNER	3,707	7,421	-50.0	47,878	87,718	-45.6
HIGHLANDER	7,791	14,714	-47.1	104,661	127,878	-18.4
LAND CRUISER	227	648	-65.0	3,801	3,251	16.5
SEQUOIA	2,399	2,567	-6.5	30,693	23,273	31.5
TOTAL SUV	26,087	43,245	-39.7	352,721	470,042	-25.2
4X2 TACOMA	4,287	7,858	-45.4	79,773	102,696	-22.6
4X4 TACOMA	4,404	5,431	-18.9	64,882	70,542	-8.3
TOTAL TACOMA	8,691	13,289	-34.6	144,655	173,238	-16.8
TUNDRA	9,191	19,219	-52.2	137,249	196,555	-30.4
TOTAL PICKUP	17,882	32,508	-45.0	281,904	369,793	-24.0
TOTAL TOYOTA DIV. LT TRUCK	50,870	88,103	-42.3	750,569	977,997	-23.5
LX	508	132	284.8	7,915	2,468	219.7
GX	1,380	2,748	-49.8	16,424	23,035	-28.9
RX	9,932	11,835	-16.1	84,181	103,340	-18.8
TOTAL LEXUS LIGHT TRUCK	11,820	14,715	-19.7	108,520	128,843	-16.0
TOTAL TOYOTA LIGHT TRUCK	62,690	102,818	-39.0	859,089	1,106,840	-22.6
TOTAL TOYOTA DIV.	118,587	189,844	-37.5	1,957,575	2,291,648	-14.9
TOTAL LEXUS	23,362	34,555	-32.4	260,087	329,177	-21.2
TOTAL TOYOTA	141,949	224,399	-36.7	2,217,662	2,620,825	-15.7
MEMO:
DOM. COROLLA	17,192	28,571	-39.8	252,877	348,016	-27.6
DOM. CAMRY	24,790	37,757	-34.3	428,841	418,757	2.1
DOM. RAV4	210	0	#N/A	247	0	#N/A
DOM. PICKUP	17,882	32,508	-45.0	281,902	369,793	-24.0
DOM. RX	8,221	8,414	-2.3	63,610	74,351	-14.7
SELLING DAYS	26	26		308	307
TOYOTA DIV. IMPORT CAR	21,825	29,719	-26.6	481,024	473,933	1.2
LEXUS IMPORT CAR	11,542	19,840	-41.8	151,567	200,334	-24.6
TOYOTA DIV NA BUILT CARS	45,892	72,022	-36.3	725,982	839,718	-13.8
TOTAL TOYOTA CARS	79,259	121,581	-34.8	1,358,573	1,513,985	-10.6
TOYOTA DIV. IMPORT LT TRUCK	23,478	40,678	-42.3	321,781	446,769	-28.2
LEXUS IMPORT LT TRUCK	3,599	6,301	-42.9	44,910	54,492	-17.9
TOYOTA DIV NA BUILT LT TRUCK	27,392	47,425	-42.2	428,788	531,228	-19.5
LEXUS NA BUILT LT TRUCK	8,221	8,414	-2.3	63,610	74,351	-14.7
TOTAL TOYOTA LT TRUCK	62,690	102,818	-39.0	859,089	1,106,840	-22.6
SPORT UTILITY VEHICLES	34,739	53,881	-35.5	432,573	543,715	-20.7
Memo: Lexus Sport Utility	11,820	14,715	-19.7	108,520	128,843	-16.0
SMALL VANS	6,901	12,350	-44.1	115,944	138,162	-16.4
PICKUPS	17,882	32,508	-45.0	281,904	369,793	-24.0
* NORTH AMERICAN BUILT VEHICLES
COROLLA	17,192	28,571	-39.8	252,877	348,016	-27.6
CAMRY	24,790	37,757	-34.3	428,841	418,757	2.1
VENZA	1,474	0	#N/A	1,474	0	#N/A
AVALON	2,436	5,694	-57.2	42,790	72,945	-41.5
SIENNA	6,901	12,350	-44.1	115,944	138,162	-16.4
RAV4	210	0	#N/A	247	0	#N/A
PICKUP	17,882	32,508	-45.0	281,902	369,793	-24.0
SEQUOIA	2,399	2,567	-6.5	30,693	23,273	31.5
RX	8,221	8,414	-2.3	63,610	74,351	-14.7
TOTAL	81,505	127,861	-36.3	1,218,378	1,445,297	-16.0
N.A. VEHICLES % OF TOTAL	57.4%	57.0%		54.9%	55.1%
SELLING DAYS	26	26		308	307
DSR = DAILY SELLING RATE

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Scion’s August sales in the U.S. tumbled nearly 20 percent from a year earlier. So far this year, sales are up 2 percent — a noteworthy increase given the tough auto market. But that’s compared to a remarkable slump for the brand in 2007, and it pales next to the growth of Toyota’s and other automakers’ small cars.

“There’s real, viable opportunity for these models,” said Rebecca Lindland, auto analyst with the Waltham, Mass.-based consulting firm Global Insight. “It seems a little bit strange that they wouldn’t be saying, ‘Hey, you know what, we’ve got a really big chance here, let’s go for it.’”

Toyota Motor Corp. launched Scion in 2003 with two models: The xA, a stout, subcompact hatchback, and the xB, a boxy, five-door wagon. It rolled out the tC, a small coupe with a sportier look, a year later. In 2007, it replaced the xA with the similar xD.

Toyota priced the cars inexpensively and made them highly customizable, with options like fancy wheel covers and an array of audio upgrades. No-haggle pricing in hip showrooms was designed to make the purchase process easier on young buyers.

Toyota executives say Scion was never meant to be a top-selling brand, but is more about appealing to Generation Y and, ultimately, hooking its members as long-term customers.

Indeed, Scion buyers are the youngest in the industry, with a median age 20 years younger than Toyota’s 52, said Scion Vice President Jack Hollis. And 47 percent of Scion buyers later purchase either a Toyota or another Scion, according to J.D. Power and Associates’ Power Information Network.

“Scion is not about how many, but about who and how — meaning who we sell them to, and how we sell them,” Hollis said.

Scion’s marketing team worked to build a brand image that resonated with its target audience: urban-dwelling, mostly male twentysomethings. They sent mobile billboards to roam city streets. They posted guerrilla ads on construction sites. They eschewed prime-time TV advertising in favor of late-night or niche cable shows.

“You’ll never see them during ‘Lost’ or ‘Desperate Housewives,’” Scion spokeswoman Allison Takahashi said.

The brand had drivers like Josh Keeler in mind.

Earlier this year, the 23-year-old insurance underwriter was gearing up with two friends for a marathon road trip across all 48 mainland states, as fast as they could. The ended up choosing a 2005 Scion xB.

“I knew that we needed a car that was able to hold up for the trip and would be reliable,” Keeler said. “I was looking for the biggest little car I could find. One that’s bigger inside than out.”

He settled on the Scion after taking one for a test drive at a dealership in his hometown of Salt Lake City. He liked its roominess, its fuel economy, and its funky, boxy look. Ultimately, he bought a used maroon model with 17,000 miles for $9,900 on eBay.

They christened it the “Scionara.”

Despite the youth appeal, sales in 2007 fell 25 percent to 130,181 and are up just 2 percent so far this year. Meanwhile, $4 gas has propelled demand for other similarly fuel-efficient models by leaps and bounds.

Sales of the Toyota Yaris, for example, are up 32 percent so far this year. The Honda Fit hatchback has seen a 56 percent rise, while Ford Focus sales are up 26 percent.

Scion’s most-efficient xD model gets 33 miles per gallon on the highway, according to Environmental Protection Agency estimates. The Yaris gets 36, the 2008 Fit gets up to 34, and the Focus gets 35.

Hollis said the brand’s 2007 sales decline can be blamed on a “production gap” before the midyear release of its second-generation xB and xD models. Toward the end of 2006, Scion pushed hard to clear out excess first-generation versions of those cars, he said, which led to lower-than-expected inventories in early 2007 and, therefore, fewer sales.

Bob Carter, group vice president and general manager of Toyota Division in the U.S., said it was never the purpose to make Scion a top-selling brand.

“I know it sounds like corporate spin, but we never had a plan to take Scion to 300 or 500,000 units,” Carter said. “That’s not the role for the brand. The role is to bring new buyers in, and then hopefully do a nice job with them, they consider a Toyota next and then as they grow in affluence, go to Lexus.”

Global Insight’s Lindland said Scion may have tied its own hands by targeting young drivers and limiting its appeal.

“It’s a different brand in some ways,” she said. “To sell to mass market goes against the original roots of the brand, which was to supply Generation Y with their own brand.”

Keeler, for his part, could not have been more satisfied with his road trip pick. Helped by synthetic motor oil and donations from family and even some sponsors, the three friends completed their 9,500-mile trip on May 7 in 106 hours and 43 minutes and documented the trip on a blog.

As for Scionara, it held up well and continues to get use, Keeler said — though during the summer months he prefers his motorcycle.

“When those cars first came out I was initially turned off by them,” he said. I thought they were a little strange, but they grew on me.”

AP Auto Writer Tom Krisher in Detroit contributed to this report

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The Toyota Division posted August sales of 182,252 units, a decrease of 9.4 percent from last August. The Lexus Division reported August sales of 29,281 units, a decrease of 9.1 percent from the year-ago month.

Toyota Division

Toyota Division passenger cars recorded August sales of 111,778 units, down 3.4 percent from the same period last year. Passenger car sales were led by Camry and Camry Hybrid, which posted combined sales of 44,064 units, up 3.3 percent over August 2007. Camry Hybrid reported August sales of 3,456 units. Corolla recorded sales of 29,443 units for the month. With limited availability, the Prius mid-size gas-electric hybrid posted August sales of 13,463 units. Yaris reported sales of 9,474 units for the month, up 20.5 percent over the year-ago month.

Toyota Division light trucks posted August sales of 70,474 units, down 17.6 percent from August 2007. Light truck sales were led by the Tundra full-size pickup with August sales of 17,401 units. The Tacoma mid-size pickup reported sales of 12,407 units for the month. Highlander and Highlander Hybrid posted combined sales of 8,070 units in August. The Highlander Hybrid gas-electric mid-size SUV reported August sales of 1,277 units, up 225 percent over last August. Sequoia posted sales of 3,195 units for the month, up 86.1 percent over the same period last year.

Scion Division

Scion posted August sales of 11,867 units. The xB urban utility vehicle led the way with August sales 4,626 units. The tC sports coupe posted August sales of 4,484 units. The xD reported best-ever August sales of 2,757 units for the month, up 3.5 percent over the same period last year.

Lexus Division

Lexus passenger cars reported August sales of 17,844 units, a decrease of 9.8 percent from August 2007. Passenger-car sales were led by the ES entry luxury sedan with August sales of 7,881 units. The IS entry luxury sport sedan reported best-ever combined sales of 6,318 units, up 17.4 percent over last August. The LS flagship luxury sedan reported combined sales of 1,772 units. The GS luxury sport sedan reported combined August sales of 1,686 units.

Lexus Division light trucks recorded August sales of 11,437 units, down 7.8 percent from the year-ago month. Lexus sales were led by the RX luxury utility vehicle, which posted combined August sales of 8,969 units. The RX 400h hybrid luxury utility vehicle reported August sales of 1,277 units, up nine percent over August 2007. The LX 570 reported sales of 748 units, an increase of 238.5 percent over the same period last year.

TMS Hybrids

TMS calendar-year-to-date hybrid sales totaled 185,051 units. TMS posted August sales of 19,529 hybrid vehicles. Toyota Division recorded sales of 18,146 hybrids for the month. Lexus Division reported August sales of 1,383 hybrids.

For the source and the charts, click here

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Toyota executives are rethinking some of the basic principles they set out for the brand – how many and what kind of vehicles Scion should sell – as they work to keep it fresh and innovative.

It’s unclear whether they can do it, and some industry observers have begun to ask whether Scion was a misstep by Toyota’s usually sure-footed strategists.

“Toyota doesn’t need Scion,” said Art Spinella, president of CNW Research, in Bandon, Ore. “They should have spent the money on developing Toyota-branded products,” he said, likening Scion to Saturn, which some critics say distracted GM from improving its established brands.

Most of the world’s automakers would love to have Toyota’s problems, of course. Even in a lousy year, the automaker just announced quarterly profits of $3.2 billion, and it stands a good chance of surpassing GM to become the world’s best-selling automaker this year.

The seeds of trouble have been germinating at Scion for some time, though. The brand’s sales fell 25 percent from 2006 to 2007. Its monthly sales were worse than the year before every month from October 2006 through March this year.

Even the introduction of the new xB and the brand-new xD, last year didn’t help. Sales have picked up since April as soaring gasoline prices fueled the small-car market, however.

Scion was proclaimed a huge success when the brand debuted in 2003. It attracted hip young customers who dismissed Toyota as their parents’ brand. They snapped up the boxy and affordable little xB hatchback and spent freely on performance and audio customization at Toyota dealers.

Toyota seemed to have found the pulse of the youth market by combining affordable little cars with Web-based marketing, special events and sponsorship of up-and-coming musicians, artists and filmmakers.

“It’s an elusive target,” said Dawn Ahmed, Scion corporate manager. “We have to challenge ourselves to be relevant to trend-setting customers. We’re looking at ways to enhance and refresh our products.”

Scion is considering adding two models to its lineup. The vehicles would be small, inexpensive and have unique looks, Ahmed said.

All three current Scion cars are compacts, but they haven’t been among the leaders in fuel economy. It’s working to address that. “We are trying to look at ways to deliver performance and fuel economy,” Ahmed said.

Adding vehicles is the easiest way to boost sales, but it flies in the face of Scion’s original brief, which was to offer two or three models at a time and replace each of them with something drastically different when the time came.

Scion violated the second of those commandments when it launched the new xB last year. A very good car and an excellent value, it’s also a straight-line successor to the one that came before, just bigger, more powerful and slightly less distinctive, Spinella said.

Very few automakers have the will to walk away from a brand’s most recognizable model, but Scion was created to rip up all the rules

“Scion is no longer cutting-edge,” Spinella said. “I don’t think Toyota understands the brand any more.”

If that’s true, the company would never admit it, and Ahmed says the Scion team is “looking to innovate every day.

“Scion was established five years ago with a blank sheet of paper,” she said. “As we look to the next five to 10 years, there are no sacred cows. We want to make the Scion brand special, unique and exclusive.”

Contact Mark Phelan at phelan@freepress.com.

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At issue is Scion’s mission–and whether the idea behind the trendy brand still makes sense.

A year after the second generation of Scion’s youth-oriented vehicles debuted, Toyota faces several problems:

–The number of young people shopping Scion has dropped dramatically since 2006.

–Before $4-a-gallon gasoline gave all small cars a big boost in April and May, Scion was in a slump it couldn’t seem to get out of. And in June, sales were declining again.

–While the brand had attracted fuel-economy-minded buyers, many are much older than Scion’s demographic target: 18- to 24-year-olds. That threatens the hipster image Toyota has carefully cultivated for Scion.

So was launching a youth brand such a hot idea after all?

“If we could relaunch Scion, I wouldn’t ever have called it a youth brand, because it’s a kiss of death,” says Brian Bolain, a former Scion corporate manager who now runs Lexus’ lifestyle events. “It creates problems when you start labeling.”

Bolain says it is better when a brand can speak for itself.

“Scion is being forced to change,” says Jeri Yoshizu, Scion’s manager of sales and promotions.

“We have to refresh our message and move our picture to the new 18- to 24-year-olds.”

But the constantly shifting target makes marketing a challenge, Yoshizu says.

The first-generation Scions were big hits with young buyers when they launched in California in 2003 and elsewhere in 2004.

But from last September through January, monthly sales declined from each previous month, even though dealers had two redesigned models in their showrooms. Year-on-year sales fell for 17 straight months.

The losing streak ended in March. Then when fuel prices soared in April, Scion sales shot up 41.5 percent compared with the previous April, when barely any cars were in stock during the first generation’s selldown. Sales climbed 28.4 percent in May but were down again in June.

Why the slump?

What’s going on? Well, online shopping of Scion is barely half of what it was during the boom years of 2005 and 2006, according to industry analyst Compete Inc. At that time, Scion routinely attracted 100,000 to 120,000 Internet shoppers a month. Since the launch of the redesigned xB and xD last summer, Scion has scratched 60,000 Internet shoppers only once.

And the number of 18- to 34-year-olds shopping the brand also has declined sharply.

“Scion is not attracting its targeted audience as well as it had in 2004-2005 and even as recently as 2006,” says Hal Wurster, managing director of Compete’s automotive practice.

Jack Hollis, Scion’s vice president, acknowledges the challenges. But he says his measure of success is not sales numbers but whether Scion is luring new, young customers to Toyota.

“How do we expand without making Scion into a traditional car company?” Hollis asks. “Experimenting with an automotive brand is tricky in a down market because it magnifies the risk. But if you don’t try anything, then you are just the same as the entire industry.”

Says Jim Lentz, president of Toyota Motor Sales U.S.A. and the first vice president of Scion: “The original Scion goal was all about transparency and reducing time to purchase cars and vehicle personalization, and none of that has changed. Scion still remains relevant today.”

Buyers getting older

Some dealers say higher prices for the second generation of products hurt the brand with younger buyers. Toyota says the boxy xB and the tC coupe still retain a young customer base. Indeed, the coupe attracts the youngest buyer of any new vehicle–age 24. But the small xD hatchback is another matter.

The rush to fuel-efficient cars is changing Scion’s demographic profile. Nielsen Online says online consumers perceive Scion as the second-most fuel-efficient brand, behind Smart. Mainstream consumers increasingly are interested in Scion, says Julie Enzweiler, Nielsen Online’s automotive research director.

Lots of baby boomers shopping Toyota for an econobox are drawn to the xD in the Scion corner of the store. Hollis says the average age of the xD hatchback buyer climbed from 37 years old to 42 in just three months.

“Fuel economy made people look at the Yaris and Matrix,” he says, “but then they also see the xD and say, ‘Hey, what’s that?’ ”

Angel Diaz, manager of Westbury (N.Y.) Scion, on Long Island, says an older crowd started shopping Scion when gasoline prices spiked.

“Once they see what Scion offers in terms of equipment, and getting 32 mpg for $16,000, it becomes more widely accepted,” Diaz says. “It’s just not the edgy crowd coming in anymore. I’m a little concerned about that.”

To slow the influx of older consumers to the xD, Toyota is launching a five-door Yaris in August. The Yaris and xD share the same platform, but the Yaris has been sold only as a three-door and a sedan.

Aim at new target?

Another concern: Should Scion continue to target its original customer base or look for younger buyers?

“Today’s 23- to 28-year-olds are maturing into Toyota or Lexus,” says Yoshizu. “They don’t stay experiencers for the rest of their lives. If pop culture is going to change and always target 18- to 24-year-olds, then we need to change to appeal to them, too.”

As a result, Scion is gently shifting away from its hip-hop music connection. A hip-hop offshoot known as electro is now commanding more attention from teens and college students — and, therefore, from Scion. The brand’s link to street art and student film will continue.

Still, Dawn Ahmed, Scion’s corporate manager, says the brand can’t just walk away from its original buyers.

“Being ‘your older brother’s car’ is not necessarily a bad thing,” says Ahmed, who left Scion to launch the Tundra pickup and has recently returned.

Ahmed says Scion still seeks provocative ways to connect with young buyers. Recently, it has been the lone sponsor of the bizarre cartoon “Assy McGee” on the Cartoon Network’s late-night “Adult Swim” segment. McGee is a vulgar, gun-slinging policeman whose body stops at his unclothed buttocks. Each episode has a fake Scion commercial starring McGee that mocks the stereotypical small-town car dealer.

New products?

Hollis says Scion needs another vehicle in the lineup.

“A fourth product is essential,” he says. “It could be an SUV. It could be a hybrid. We want a fourth product that buyers of the other three Scions don’t like.”

Whatever gets added, Hollis wants the sticker price to stay below $20,000.

How much Scion’s lineup can expand will depend on whether Toyota continues to give it license to create products. Yoshi Inaba, who launched Scion as CEO of Toyota Motor Sales, says Scion risks having its product plan marginalized by the parent company.

“Our second-generation products were not as free as we thought we would be,” says Inaba, who retired from Toyota to run the international airport near Nagoya, Japan. “The xB and xA successors are a similar concept, slightly bigger. We are coming into a normal model-change cycle, not doing anything faster, which I am not happy about.”

Still, it is hard to argue with Scion’s success.

More than 500,000 of the 600,000 Scions sold have been to people who never had been inside a Toyota store. More than 80 percent buy another Scion or move on to a Toyota or Lexus. Accessory sales per vehicle are double those for the typical Toyota. Lentz also is proud that the dealer body has kept the brands separate.

“In the beginning, dealers weren’t sure about Scion’s menu pricing and the store-within-a-store,” he says. “But they gave it a chance, and even though we’ve had hot markets and cold markets, they have really stuck to the overall business.”

The dealer body has expanded from what was to have been a boutique offering. On Jan. 1, 2005, Scion had 856 retailers. But as sales soared in 2005 and 2006, more dealers signed up. Currently, 982 of 1,234 Toyota dealers carry the brand. That has driven average sales per outlet down, but Toyota says it’s not worried.

“It’s never been about the numbers,” Hollis says.

Scion’s biggest risk may be that it is evolving into just another brand selling compact vehicles.

“Scion was intentionally created to be different, but it has always had to work to stay separate,” says Bolain. “You don’t want to let the parent company dominate, but it can happen.”

Adds Lentz: “It’s more of a battle now. We have to reeducate TMC on the reasons for Scion.”

(Source: Automotive News)

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A year ago, Scion introduced a new version of its xB along with the xD, a replacement for the unloved xA five-door, to join the tC coupe in its lineup. Yet these new products failed to excite young buyers the way their predecessors had, and year-on-year sales for the brand fell for 17 straight months until April of 2008. The recent spike in gas prices has brought in new customers looking to save money at the pump, but even this is beginning to fade as sales were again down in June. Bigger and heavier, according to former CEO of Toyota sales Yoshi Inaba (the man responsible for creating Scion), the brand’s “second-generation products were not as free as we thought they would be.” In addition, dealers are complaining that because of additional content the new vehicles are more expensive, a turnoff for aspiring DJs working at Starbucks to pay the bills.

So is the problem Scion’s product, or something more? While offering a fuel-efficient lineup has been good for sales recently, most of the brand’s new buyers are far older than the group Toyota is seeking. The number of Scion owners fitting the brand’s demographic has been declining steadily since 2006, especially for the new xD hatchback, which now sports an average buyer age of 42. Offering generous levels of equipment and up to 32 mpg for around $16,000, Scions are becoming increasingly popular with mainstream consumers, but this is killing the brand’s street cred and worrying company officials. According to Scion manager of sales and promotions Jeri Yoshizu, the brand “is being forced to change” and needs to start targeting “the new 18- to 24-year-olds.” She explains that Scion’s original buyers, now in the 23- to 28-year-old range, “don’t stay experiencers for the rest of their lives” and the brand should stop trying to appeal to them. “If pop culture is going to change and always target 18- to 24-year-olds,” she believes Scion needs to do the same.

To do this, besides adjusting its marketing (the brand is promoting emerging music and embedding ads in shows on the Cartoon Network’s Adult Swim), Scion vice president Jack Hollis says the lineup needs to expand. Claiming “a fourth product is essential,” he speculates that it could be anything from an SUV to a hybrid, as long as it’s “a product that buyers of the other three Scions don’t like.” With the new xD and revised xB, in a way Scion has wound up building Euro-size mommy-mobiles — their balance of space, power, and gas mileage are perfect for hauling kids in an age of $4 gas. And while many automakers would doubtless love to have these consumers, if Scion wants to keep marketing itself as a brand for hipster youth, it looks like some changes will be in order.

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