Scion loyalty keeps owners in the Toyota fold

LOS ANGELES - The Scion youth brand is keeping customers in the Toyota family.

More than half of Scion owners trading in their cars for new vehicles stay under the Toyota umbrella. That's nearly double the rate of any other feeder brand's loyalty to an automaker, according to recent data from the Power Information Network.

But Scion's under-30 owners are not as loyal to the Toyota family as older Scion owners, taking some shine off Scion's success as a youth-oriented brand.

During the April-June period, 50.3 percent of Scion trade-ins went for a Scion, Toyota or Lexus vehicle. The loyalty rate for Scion's under-30 owners was 42.7 percent.

"Whether it's Chevy owners going to Buick or Dodge owners going to Chrysler, nowhere do you see a feeder brand of Scion's magnitude," said Tom Libby, senior director of industry analysis at the Power Information Network.

Granted, Scion defies categorization; its small, low-cost lineup feeds a large, mass-market brand, Toyota. The closest comparison is with Saturn, which had only 24.5 percent of its owners trade in for another Saturn or another GM product.

"Toyota has created a rung lower than anybody else," Libby said. However, Scion loses some of its loyalty advantage if you compare the high loyalty rates for under-30 owners of competing entry-level models, such as the Chevrolet Cobalt, Honda Civic and Ford Focus (see chart, right).

For instance, 61.7 percent of Cobalt owners traded in their cars for GM cars. And 48.8 percent of Civic buyers traded in their cars for Hondas or Acuras.

Mark Templin, a Scion vice president, suggested that many Civic trade-ins were for the redesigned 2006 Civic.

Templin says Power data show that many Cobalt trade-ins have high negative equity, meaning that the owners owe more on their car loans than the cars are worth. GM offers financing deals to solve the problem, which is why Cobalt owners have high GM loyalty rates, he says.

Loyalty is a tricky concept. Certainly, it can demonstrate a customer's love for a current car. But it also can involve a risk-averse consumer who is content to stick with a brand rather than look elsewhere. Most automakers prize loyalty, though, because it's cheaper to keep a customer than to lure one from another brand.

Scion was launched in the California market three years ago and went national in the summer of 2004. Many initial Scion customers fell into the fickle "early adopter" category. That makes Scion's retention numbers surprising, Templin said.

More impressive, he said, is that 80 percent of Scion buyers are new to the Toyota family.

You may e-mail Mark Rechtin at [email protected]