Toyota axing Scion after years of slumping sales

Toyota is killing its Scion brand after years of slumping sales.

Beginning in August, 2017 model-year Scion vehicles will be rebadged as Toyotas. The FR-S sports car, iA sedan and iM 5-door hatchback, as well as the C-HR, which recently debuted at the L.A. Auto Show, will be a part of the Toyota line-up. The tC will have a final release series edition and end production in August, according to Toyota Motor Corp.

Scion was formed in 2003 to attract younger buyers. It was known for its funky designs, like the boxy xB, and was the brand Toyota used when it wanted to experiment with new kinds of marketing or no-haggle pricing.

But there were multiple problems. The Millennials that the Scion was aiming for held back on big acquisitions during the recession, and when they did buy, they were just as happy to buy Toyotas. Scion’s small, oddball lineup never connected with buyers and they were a bit more expensive. Scion’s best-seller, the tC coupe, starts at $21,330, or $2,600 more than a Honda Civic.

At the brand’s height, in 2006, sales of all Scion models combined reached just over 173,000. Sales stood at 56,167 in 2015.

In Hawaii, the Scion brand was introduced in mid-2004 by Servco Automotive Hawaii, which operates nine dealerships around the state. Other units of Servco distribute Toyota and Scion models and other makes to dealerships on all islands. Toyota/Scion dealerships on Maui and Hawaii island are indepently owned and operated.

Given the brand’s transition, “our first two major concerns are taking care of our employees that work in the Scion area,” and customers who have purchased the vehicles, said Rick Ching, president of Servco Automotive.

Servco Scion is a separate dealership in Servco’s Mapunapuna complex and employs 13 people.

Ching said there would be “no position elimination or layoffs.”

Customers who have purchased Scion vehicles can continue to have them serviced in the Toyota dealerships’ service departments, “so there’s no change there,” Ching said. Remaining inventory will be sold off and also will be serviced by Toyota, as the dealerships await shipments of the re-badged 2017 models.

Scion’s sales in the islands have been stronger than on the U.S. mainland, given Hawaii’s demographics and the brand’s deliberate appeal to the youth market, Ching said

“I think recently, some changes Toyota has done to its lineup … appeal to a broader segment,” creating “less need for a separate brand,” but it has been limited to those markets, he said.

The Scion brand was started in the United States and later spread to Canada and Puerto Rico, Ching said. “It’s not a worldwide brand,” but it has been limited to those markets, he said.

Toyota says it achieved what it had hoped with the Scion, including attracting younger buyers. Half of the 1 million Scions sold were bought by people under 35, the company said.

“Scion has allowed us to fast track ideas that would have been challenging to test through the Toyota network,” said Jim Lentz, founding vice president of Scion and now CEO of Toyota Motor North America.

Scion has no standalone dealerships. The brand is sold through 1,004 Toyota dealerships.

It’s not unusual for automakers to kill a brand or pull it out of a particular market. Ford Motor Co. killed its Mercury brand in 2010, and multiple brands, like Izusu and Renault, have left the U.S. market. But Kelley Blue Book senior analyst Karl Brauer said this is the first time a U.S.-specific brand launched by a Japanese manufacturer has been killed.

Brauer says Scion was a victim of the success of the Toyota brand. The Toyota Camry sedan has been the best-selling car in the U.S. for 14 years, and the brand has a full lineup that appeals to Millennials and Baby Boomers alike.

The end of Scion also arrives with Millennials starting their own families and they now want SUVs.

“Even Toyota can’t compete with Toyota,” Brauer said.

Star-Advertiser reporter Erika Engle contributed to this story.