Toyota to scrap Scion brand, keep the cars

Peak in 2006

The Scion brand emerged in 2002, with a decidedly countercultural image compared with the more staid Toyota. The first cars -- the boxy xB and the compact xA -- arrived a year later in New York and California, with early marketing directed at nightclubs and other youth hangouts rather than mainstream outlets like television. The brand went nationwide in 2004 and added the tC coupe. Sales peaked in 2006 at 173,034 units.

But the combination of the Great Recession and Toyota’s unintended acceleration crisis steered Toyota’s attention -- and money -- elsewhere; investment in Scion’s product range suffered. By 2010, a time of pronounced economic uncertainty among Scion’s young target customers, sales had bottomed out at 45,678 (about two months of Camry sales that year).

The addition of specialty cars -- the FR-S coupe co-developed with Subaru and the bite-size iQ microcar -- gave Scion new life two years later.

But with dealers still grumbling, Toyota Motor Corp. President Akio Toyoda urged them to stick with the brand. The catch: They’d have to wait a couple years for new product because Toyota’s resources were limited and the company needed to “prioritize,” Toyoda said in a November 2013 interview with Automotive News.

That new product finally arrived in 2015 with the launch of the iA subcompact sedan built by Mazda and the iM five-door hatchback, along with an oddball TV ad campaign that became a viral hit online. Last year’s sales hit 56,167 -- but remained less than a third of their peak.

Soon after the new vehicles hit the market last year, Toyota in September named a new brand chief for Scion, Andrew Gilleland, who had helped work with dealers to get the brand off the ground in 2003 and later went to Lexus. He replaced Doug Murtha, who took a corporate strategy position at Toyota North America.

Previous leaders of the brand included Mark Templin, who is now global head of Lexus, and Jim Farley, who helped launch the Scion brand and later left Toyota for Ford, where he now heads European operations.

Folding Scion into Toyota will take the spotlight off Scion’s lagging results and potentially negative attention month after month when sales figures come out. (Thanks to the new models, Scion sales were up in 38 percent in January.)

But it wasn’t Scion’s slow volume that doomed the brand, Toyota said. Rather it was the question of whether it still had a reason to exist. Whereas Generation Xers wouldn’t be caught dead in the same brand their parents and grandparents lauded in 2003, millennials have a much more favorable view of Toyota.

That left many buyers with the view that Scion was a lesser brand than Toyota, Carter conceded. After all, nearly all Scion models sold for less than $22,000 and with limited trim packages and options.

“I think this really speaks to the difficulty of selling what I and a certain amount of people felt was a lesser Toyota,” Brauer said. “That’s what it always was to me, a lesser Toyota.”

Toyota -- having regained its global dominance and begun a broad reorganization of its North American operations -- decided to move quickly to seize what it saw as an opportunity.

“Without a doubt, volume creates awareness,” Carter said. “And there’s a much higher awareness of Toyota than there is of Scion today. And with that level of awareness, Toyota being an aspirational brand, now is the right time to make this move.”

Toyota will be notifying dealers throughout the day of its decision, Carter said. The automaker has already told both the Scion and the Toyota dealer councils, both of which supported Toyota’s decision, Carter said.

“They understand what’s happening on their showroom floors,” Carter said. “This just validated it.”

Ad agency impact

Meanwhile, Toyota will not immediately change its relationship with ad agency Droga5, which began working for Scion early last year, according to Advertising Age, an affiliate of Automotive News.  

And ads for Scion will continue running, at least for now, according to a Scion spokeswoman. "We still have many Scions to sell, so we will continue our marketing for the time being. We'll make decisions on other marketing plans and partners at a later time, " she said.

Droga5's campaign, called "Weird, Right?" launched in September and included quirky ads starring the likes of James Franco, Jaleel White (Urkel from "Family Matters") and a hipster vampire. Droga5 also worked on the launch campaign for the Toyota Mirai fuel cell vehicle.

E.J. Schultz of Advertising Age contributed to this report.