Toyota dealers get OK to drop sagging Scion

LOS ANGELES -- Toyota has told dealers that too many of them carry the underperforming Scion franchise, so they're free to walk away from the youth-oriented brand without facing penalties.

But the company has offered a glimpse of two possible future products for dealers who stick with Scion.

At Toyota's national dealer meeting in Atlanta this month, dealers were told Scion "'may not be for everybody,' because there's not enough throughput," said a Texas dealer who spoke on condition of anonymity.

Although executives did not give a target for cutting the number of outlets, they told dealers: "If you don't want Scion, if it doesn't work for you, it's OK if you want to walk away," the dealer said.

About 1,000 of Toyota's 1,225 dealers carry the Scion franchise. When Toyota launched the brand in 2003, it expected about half of its dealers to sign up. But when initial volume boomed on the success of the xB hatchback and tC coupe, Toyota dealers jumped into the game.

After peaking at 173,034 sales in 2006, Scion volume has fallen off sharply. Most of the vehicle lineup is aging, and Toyota has shown few signs of offering replacements.

Toyota Senior Vice President Bob Carter declined to comment on the specific discussions about Scion's dealer count at the meeting, saying, "We're not ready to go public with that yet."

But Toyota Division General Manager Bill Fay recently told WardsAuto that Scion "has a few too many stores," and is looking at store viability across the dealer body.

For dealers who do remain, there is the promise of new products on the horizon. That could include the on-again, off-again Scion FR-S convertible, which appears to be back in the rotation.

At the Geneva auto show this year, Toyota showed the FT86 convertible concept, a rendering of Toyota's rear-wheel-drive GT86 coupe, as the FR-S is called in Europe. There have been concerns inside the company that the projected price point would be too high for Scion's target customer.

But at the Atlanta meetings, the FR-S convertible concept was driven on stage to the strains of Aerosmith's "Sweet Emotion." Toyota sources say the automaker likely will sell the car in other markets with Toyota badging.

"They don't show product they don't plan on building," said a California Toyota dealer. But he cautioned that because the FR-S is co-branded with Subaru, the other automaker may have to give approval to build the convertible.

Toyota also showed a drawing of a subcompact crossover concept with a "racy silhouette," the California dealer said.

The vehicle would be smaller than a RAV4 and would compete against Honda's upcoming crossover based on its Fit hatchback, a Toyota source said.

Although Toyota rarely comments on future product, Carter said the FR-S convertible "is under study but has not been green-lighted."

He declined to comment on the crossover concept, but Toyota executives admit to looking into the segment after Honda's crossover unveiling at this year's Detroit auto show.