Toyota Canada Not Worried About New Scion Launch

Automaker has no plans to delay its ramp-up to the 2010 launch of its youth-oriented Scion despite economic forecasts that the country is on the edge of a recession.

VANCOUVER (CP) -- Toyota Canada could be forgiven if it second-guessed its decision to launch an entirely new car line just when economists forecast the country will be dancing on the edge of a recession, if not clawing its way back from one.

But the company, whose Japanese parent has the deepest pockets in the auto industry, has no plans to delay its ramp-up to the 2010 launch of the youth-oriented Scion.

Who's to say they're wrong?

Things may be different come the New Year but Canadian auto sales rose 1.5 per cent in October despite the scary economic news. Toyota's sales rose 9.4 per cent and its dealers have already sold more cars than in all of 2007.

It's also worth noting that Toyota's luxury Lexus division debuted in 1989, right into the teeth of a recession.

Sandy Di Felice, Toyota Canada's director of external affairs, says dealers at a recent meeting were palpably excited when the company announced it was bringing Scion to Canada.

The three-model line will be sold initially in Montreal, Toronto and Vancouver markets, with plans to expand to smaller cities once the brand is established.

The cars -- the tC coupe, xD sub-compact five-door hatchback and xB compact five-door hatch -- will be offered at mini dealerships inside existing Toyota stores.

Pricing won't be known until just before the cars show up in dealer showrooms but in the United States, where Scions have been sold since 2003, the xB starts below US$16,000 and the tC has a US$17,000 asking price.

Di Felice says Scion has added between two and three per cent to Toyota's total U.S. market share without cannibalizing sales of other Toyota models.

"You can always argue timing from an economy point of view and the market cratering around us," says Dennis DesRosiers, Canada's best known automotive analyst, who predicts Canadian vehicle sales will shrink about eight per cent next year.

"Who knows what's the right timing from an economics point of view. But in terms of introducing the brand they were smart not to bring it in initially. They learned a lot from the U.S. side of the marketplace."

The cars are sold under the Scion badge only in North America. They are Toyotas everywhere else.

Scions, equipped with 1.8-litre and 2.4-litre four-cylinder engines, are built on the same platforms as Toyota's Yaris subcompact and Corolla and Matrix compact models.

Which begs another question: Why does Toyota need another batch of small cars in this relatively small market?

In a word, cool.

Existing Toyotas are a lot of things but hip isn't one of them. The MR2 sports car and Celica coupe are long gone, leaving the Matrix and Corolla XRS as the only vaguely sporty models.

Scion has helped Toyota tap into younger U.S. consumers.

"And my God you've got an awful of the demographic coming into buying age (in Canada)," notes DesRosiers.

Rather than pitching high performance, Scion pushes edginess.

The cars themselves kind of look like the box they came in but offer a high number of accessories -- both through Scion dealers and after-market suppliers -- so each driver can personalize their ride.

They're tuner cars, meaning they're well adapted to accept customization in everything from performance-enhancing parts to monster sound systems and look-at-me appearance bits.

"It's been a reasonably successful tuner vehicle in the United States," says DesRosiers.

"Now, Canadians tend not to be in the tuner market to the same degree. But to the degree that Canadians do accessorize their vehicles this would be a hot accessorization vehicle."

A majority of U.S. Scion buyers are young men but the funky look and frugal fuel consumption also attract a significant percentage of women.

BMW followed the same blueprint when it launched the revived Mini in 2002, minimizing mainstream advertising and pitching the little car as a cultural phenomenon with a heavy emphasis on the web.

If Scion captures some older buyers, it's gravy. Toyota clearly is not much interested in them, DesRosiers concludes. As evidence, he offers this experience when he encountered a Scion customer clinic while on a U.S. business trip.

"So I went and signed up, and the maximum age that you could be participating was 45," he recalls.

"They wouldn't even let me test drive the vehicle and fill out a survey. They had no interest in me ...You literally had to be young."

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