Scionlife.com - Scion Still Ironing Out Kinks

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LOS ANGELES - Scion has sold nearly a half-million vehicles - largely to its targeted Generation Y demographic - since taking its first tentative steps in California in the summer of 2003.

But that doesn't mean all is right with Toyota's youth brand as its second generation of products arrives this summer. In fact, Scion executives concede that the business plan has several weaknesses.

"There are probably 10 big things we could do much better," said Steve Haag, Scion corporate manager.

Among Haag's laundry list of things to improve:

The transaction still takes too long for time-obsessed young buyers, especially in the finance and insurance department.

Not enough salespeople have sufficient Scion product knowledge.

The success of specific grass-roots marketing efforts is hard to track.

The connection between Scion's Web site and dealerships should be stronger.

Haag, 47, took the Scion post in 2005. The 25-year Toyota Motor veteran has held several sales and marketing jobs for the Toyota and Lexus brands, including a stint at Toyota Motor Europe's Brussels office in the 1990s.

Speaking at the Motor Press Guild luncheon here, Haag said he didn't blame dealers for not paying more attention to Scion. He estimates that only 5 percent of the 930 Toyota dealers who carry the brand do enough Scion volume to warrant a dedicated sales staff.

"We wanted 450 or 500 Scion dealers and got 900," said Haag.

No refusals

The automaker cannot refuse a Scion franchise to a Toyota dealer who wants one. Many dealers grabbed the franchise merely as a defensive move, "so they aren't the only guy who doesn't sell it," Haag said.

In some stores, the sales and F&I departments often split time between Toyota and Scion to earn adequate commissions. The Scion experience suffers as a result.

In outlying areas, Haag said: "Scion volume is so low, they cannot allocate the resources and be passionately engaged. Then it becomes a negotiation with customers over whether to buy a Scion or a Yaris.

"The worst case is where it's an open floor situation, where the salesman is mostly selling Tundras and Camrys and a few Scions. He just wants to get the Scion delivered and move on to sell more Priuses. He won't talk vehicle personalization because he doesn't know whether the service department can get the part installed."

Scion also needs to do a better job of educating its young buyers about what happens in the F&I office. Often, a prospect will configure a Scion online and use the payment calculator assuming they have first-rate credit.

But once at the dealership, the prospect may be stunned to discover he has to pay 21 percent interest instead of 9 percent because he or she has little credit history.

Still, Scion has had success in reaching its young buyer base. More than half have been under 35, Toyota says.

Part of the reason that Scion is hitting its Gen Y target is that the brand has stayed relatively under the radar, avoiding most mass media. Its advertising is exclusionary, such as one rare billboard that shows an xB with the tag line, "So wrong for so many."

Don't show the car

In that vein, Scion is quietly launching the redesigned xB and new xD that arrive this summer. Other than a December sneak preview to 300 Scion owners in Miami and a February media unveiling at the Chicago Auto Show, no marketing is planned until the vehicles arrive.

For now, Scion has a viral Web site (www.want2Bsquare.com) that barely has any connection to the products. The site is composed mainly of games that involve Lego-like boxing robots and critters becoming roadkill or microwaved splatter.

"We could sell a lot more Scions if we blasted TV ads," Haag said. "But everything we do comes back to the goal of capturing the people who otherwise would not consider a Toyota product