Don't Dismiss Scion

There are a dozen reasons to explain why the new Scion youth-marketing effort is dumb, extravagant and unnecessary.

There is really only one reason to believe it might become a sudden, terrifying success: Toyota is behind it.

Jed Connelly, Nissan senior vice president, sales and marketing, sums it up in a recent interview: “I'm not sure I quite understand (Toyota's) strategy. But trust me, I understand Toyota doesn't make big mistakes.”

If Toyota were a hockey team, it wouldn't celebrate after winning the Stanley Cup. Instead, it would quietly retire to the locker room and spend endless hours analyzing its play and figuring out why it didn't sweep every round. The following year, it probably would.

Critics say the creation of Scion is a signal that Toyota's relentless quest for perfection has reached the point of self-loathing. It has convinced itself that it is so old and stodgy that it cannot win new, younger buyers unless it creates an expensive new brand and image that is very un-Toyota like.

It's popular in many circles to mock Scion as being desperate and silly. And it's being argued that Honda already has a leg up because its innovative Element is in showrooms now.

Funny, we've heard this all before. Fifteen years ago, Toyota introduced its first Lexus models and announced the flagship would be priced $10,000 less than comparable Mercedes and BMW models. That got everyone's attention.

And then Lexus dealers immediately developed a reputation for delivering extraordinary sales and service that set a new standard for the industry. An historic number of awards for quality and customer satisfaction followed.

Over a period of three or four years, the industry reaction went something like this: Curiosity and derision, grudging respect, shock and awe. Honda's Acura was the first Japanese luxury brand, and had a big head start. Yet neither Acura nor Nissan's Infiniti, launched at the same time as Lexus, have come close to matching the success and brand equity of Lexus.

The scenario for Scion likely will be similar, only success will come even faster. Prices for the Scion xA and xB are low, starting in the $12,000 to $14,000 range. Quality is astonishingly good.

The cars already are a big hit in Japan. Toyota expected sales to be 7,000 and 4,000 per month for the Japanese versions of the xA and xB, respectively, and orders are six times that.

In a difficult global economy, Toyota has an 8% operating margin while General Motors is fighting to get above 1.5%. Its market capitalization is bigger than GM, Ford and DaimlerChrysler combined. Toyota didn't get to this level by making goofball marketing decisions.

It's true that developing a separate youth-oriented division may not make sense for any other auto maker in the world. But the strategy will work for Toyota, because it has the size, the strength and the will to make it succeed.