Toyota (NYSE:TM) said on Wednesday that it will discontinue its youth-oriented Scion brand, effective later this year.
What's happening: Toyota said the Scion brand will be officially discontinued in August. The current Scion iA, iM, and FR-S models won't be discontinued, though; instead, their 2017-model-year iterations will be rebranded as Toyotas and sold at regular Toyota dealerships. (The fourth Scion model, the tC coupe, was already set to be discontinued after the 2016 model year.)
Models planned as future Scion products will also stay on schedule and will be branded as Toyotas when they're introduced. The Scion CH-R, a subcompact crossover Toyota unveiled at the Los Angeles Auto Show last fall, will be sold as a Toyota around the world when it arrives in 2017, the company said.
Current owners of Scion products will continue to be able to receive service at Toyota dealerships' service departments.
What it means: Toyota established Scion as a stand-alone brand in 2003, hoping to learn how to connect with younger buyers who were shunning Toyota-brand products they saw as boring in favor of more appealing alternatives.
It was a success: 70% of Scions sold since the brand's inception were purchased by customers new to Toyota, and 50% of the brand's customers were under 35 years old. The average age of a Scion customer is 36, Toyota said.
But Toyota is now comfortable discontinuing the Scion brand because it thinks it has learned the lessons it set out to learn. Attracting young buyers is no longer a problem for its core brand. The company thinks today's crop of younger buyers has a better appreciation of Toyota's longtime brand strengths.
It didn't quite say it in these terms, but Toyota also seems to think its current Toyota-brand products are more appealing to younger buyers (or put another way, less boring) than what it offered when Scion was first established.
Toyota's U.S. CEO, Jim Lentz, characterized the move as a "step forward" for the core Toyota brand. "Our goal [when Scion was established] was to make Toyota and our dealers stronger by learning how to better attract and engage young customers. I'm very proud because that's exactly what we have accomplished," he said in a statement.
What happens next: Given that all planned Scion models will simply be rebranded as Toyotas, this move is unlikely to have any meaningful impact on the Japanese giant's U.S. sales. But it's interesting that this move was announced just a few days after Toyota moved to take full ownership of specialist tiny-car maker Daihatsu.
Toyota has long worked closely with Daihatsu (in fact, some Scions were based on Daihatsu models), and it hinted last week that a worldwide rollout of Daihatsu as a Toyota sub-brand was a possibility. Is it shutting down Scion to make room for the debut of Daihatsu in the U.S. and other markets? Stay tuned.