Already a Bloomberg.com user?
Sign in with the same account.
Over a blustery Memorial Day weekend in San Francisco, a team of twentysomething Toyota (TM
) Motor Corp. reps in goatees and sunglasses set up shop near the intersection of Haight and Ashbury. With hip-hop blaring and banners heralding the new Scion brand, they encouraged passersby to test-drive new models. The willing got goodies like remote-control cars, clothing gift certificates, and music CDs. "It's an underground approach," said Una Hernandez, a 31-year-old who took in the scene. "It probably raised my opinion about the car."
Toyota sure hopes so. In the most unorthodox new-car campaign in its 70-year history, the auto maker plans to roll out its Scion brand in the U.S. with a California launch on June 9. The event marks the company's first new nameplate since it introduced Lexus 14 years ago. And as Toyota gears up for a national rollout over the next year, it is deploying a garage full of alternative marketing techniques. The goal: to win over young buyers, especially elusive 18-to-25-year-olds, with Scion's quirky styling, myriad custom options, and hip sales approach. Says Brian Bolain, national manager of Scion sales and promotion: "Every generation wants to discover a brand and claim it as its own."
Still, it's far from clear Toyota can replicate its success with Lexus. Generation Y is notoriously fickle, after all. And the Japanese auto maker is widely perceived by younger buyers as dowdy; its average driver in the U.S. is 46 years old, the oldest among Japanese carmakers. "In a few years, Toyota might become a Japanese Buick," says George C. Peterson, president of AutoPacific Inc., a consulting firm in Tustin, Calif.
To keep that from happening, Toyota badly needs to drive younger buyers into its showrooms. It has been laying the groundwork for Scion in California for more than a year. Guerrilla marketers have been putting up posters with slogans like "No Clone Zone" and "Ban Normality" and projecting similar images on buildings at night. And Toyota is blowing most of its estimated $50 million marketing budget on events like its San Francisco "ride-and-drive," and brochures bundled with such publications as Urb, for the alternative crowd, and Tokion, read by young fans of Asian culture.
Toyota's radical approach extends to Scion's design as well. While the xA hatchback looks like a conventional ride, its boxy cousin, the xB van, has the distinctive lines of a World War I ambulance. Toyota hopes the quirky styling will appeal to all those young nonconformists out there. Most important, the auto maker is gunning for the "tuner" market -- younger drivers dedicated to bumper-to-bumper customization. To reel them in, Toyota is offering some 40 options, ranging from multicolor interior lighting to chrome shifter knobs and clear taillights. The cars also are affordable: The xA starts at $12,480, the xB at $13,680.
While the Scion is being sold as a whole new brand, it won't be getting dedicated dealerships -- not yet, anyway. Instead, dealers are setting aside part of their showrooms for Scion. At Toyota of North Hollywood, Calif., general manager Chris Ashworth figures he has spent $100,000 outfitting his Scion department with gray tile, a stereo system, and futuristic furniture. At an estimated profit of $500 per car -- half his average margin -- Ashworth figures it will take him two years to earn back his investment. But if more traffic drives his way, that's fine with him.
Will Toyota penetrate the youth market? Honda (HMC
) Motor Co. launched its own boxy Element last year, promoting it as a "dorm room on wheels." But the $16,500 SUV's typical buyer turned out to be 41 years old. In other words, the Element isn't luring a whole new generation that might trade up later.
Toyota is taking less of a gamble than one might think, however. For one thing, piggybacking on existing dealers and steering clear of pricey TV spots will keep costs low. And the Scion is based on vehicles already selling well in Japan. "They've done as risk-free a strategy as possible," says Wesley R. Brown, an analyst with the automotive consulting firm Nextrend Inc. The rest is in the hands of the tuners. By Christopher Palmeri in Los Angeles, with Ben Elgin in San Francisco and Kathleen Kerwin in New York