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A midlife sales crisis for Toyota's Scion brand?

NEW YORK — Five years after Toyota rolled out a hip, inexpensive and fuel-efficient brand called Scion, the Japanese automaker still sees it as a tool to attract young buyers. But slowing sales of Scion's eye-catching vehicles indicate they may be losing some cachet.

Scion's August sales in the U.S. tumbled nearly 20 percent from a year earlier. So far this year, sales are up 2 percent — a noteworthy increase given the tough auto market. But that's compared to a remarkable slump for the brand in 2007, and it pales next to the growth of Toyota's and other automakers' small cars.

"There's real, viable opportunity for these models," said Rebecca Lindland, an auto analyst with the Waltham, Mass., consulting firm Global Insight. "It seems a little bit strange that they wouldn't be saying, 'Hey, you know what, we've got a really big chance here, let's go for it.' "

Toyota Motor Corp. launched Scion in 2003 with two models: the xA, a stout, subcompact hatchback, and the xB, a boxy, five-door wagon. It rolled out the tC, a small coupe with a sportier look, a year later. In 2007, it replaced the xA with the similar xD.

Toyota priced the cars inexpensively and made them highly customizable, with options like fancy wheel covers and an array of audio upgrades. No-haggle pricing in hip showrooms was designed to make the purchase process easier on young buyers.

Toyota executives say Scion was never meant to be a top-selling brand, but is more about appealing to Generation Y.

Indeed, Scion buyers are the youngest in the industry, with a median age 20 years younger than Toyota's 52. And 47 percent of Scion buyers later purchase either a Toyota or another Scion, according to J.D. Power and Associates' Power Information Network.

Despite the youth appeal, sales in 2007 fell 25 percent to 130,181 and are up just 2 percent so far this year. Sales of the Toyota Yaris, by contrast, are up 32 percent so far this year. The Honda Fit hatchback has seen a 56 percent rise, while Ford Focus sales are up 26 percent.

Scion's most-efficient xD model gets 33 miles per gallon on the highway, according to Environmental Protection Agency estimates. The Yaris gets 36, the 2008 Fit gets up to 34, and the Focus gets 35.

A midlife sales crisis for Toyota's Scion brand? 09/15/08 [Last modified: Monday, September 15, 2008 10:21am]
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