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Scion to add another model...a hybrid?

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Will Scion Add More New Models?
A fourth line – or a hybrid – may be in the works.
by Paul A. Eisenstein | Link to Original Article @ TheCarConnection

Three's company - but would four be a crowd for Toyota's trend-setting Scion division?

What sounds like a riddle is actually a serious issue for the youth-oriented brand. Since its launch in 2003, Scion officials have insisted on offering a maximum of just three models in the lineup. For the '08 model-year, they're dropping the original xA to make room for the new xD. But as sales grow, so might the model count, according to Scion corporate manager Steve Haag.

"We have to expand a bit," Haag said, adding that "We have to offer more products, (though) we want to remain small."

Exactly how many more products and when they might appear, the Scion executive declined to discuss, but during a morning of formal and informal discussions, he gave at least a few hints. Scion is all but certain to remain primarily focused on small, entry-level models, like the three currently available. But it may be possible to move a bit upmarket, or add something slightly larger than existing models. And a hybrid would fit the line-up well, Haag said, but not at the current price premium. Toyota is pushing down the cost of its hybrid technology, he noted, and that could make a Scion gasoline-electric vehicle possible.

The new xD is Scion's most fuel-efficient model, but even with a five-speed manual, it gets only 27 miles per gallon in city driving, according to the newly-revised 2008 EPA guidelines, and 33 on the highway. Haag acknowledged that Scion's overall fuel economy numbers "may not appeal to those buyers" focused on the environment, many of whom fit the "trend-setting" mold that the Toyota division is targeting.

Despite its reputation for being able to rapidly respond to market trends, Haag said Toyota simply didn't have enough time to shift gears when fuel costs began their rapid run-up in 2005. But with pump prices running near record levels, it's a factor that Scion will have to seriously consider in the future.

So far, there's little indication that fuel prices are affecting Scion sales. Volume nudged a record 170,000 last year, and Haag said the biggest question for the brand is how much higher it can aim. "Maybe the sweet spot," he suggested, is "200,000 to 250,000."

About 950 of Toyota's 1200 U.S. dealers now carry the brand-within-a-brand, and there are early signs that Scion buyers are opting for other Toyota products when it's time to trade in.

Right now, Scion claims its buyers are, on average, the youngest in the industry, with a median age of around 30. They are clearly the Internet generation, spending 50 percent more time online than they do watching television, revealed Haag. That justifies the decision to avoid traditional advertising outlets, he explained, such as TV.

They're also deeply individualistic, which fits the Scion "mono-spec" strategy. The brand's products are available from the factory with only a limited number of choices, such as manual or automatic transmission and paint color. But there are a wide array of accessories that can be ordered through the dealer, including bodywork and audio systems. About half of all Scion buyers have customized their cars this way, Haag noted, spending, on average, about $1000 a vehicle.
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