Tokyo, Japan - When Toyota looked into the future at the turn of the millennium and aimed its new, edgy Scion small-car brand at twenty-somethings, it could not have guessed that the nameplate would be dead in just 12 years.
In killing off the brand last week, the Japanese company was responding to the changing habits of millennials - those born in the 1980s, 90s and 2000s - who are reshaping the traditional model of car ownership.
One of the executives behind the Scion brand said: “Surveys tell us young buyers are less interested in owning cars.
“They either don't have the financial leeway or they're substituting ride-sharing or car-hailing services such as Uber for car ownership.”
Toyota launched the Scion brand hoping Generation Y-ers would become the grown-up Toyota buyers of tomorrow. It worked, for a while, with the brand selling 173 000 cars in 2006, but sales dropped to just 56 167 in 2015, prompting the world's biggest carmaker to call time - although some Scions will be re-badged as Toyotas.
Brandon Perez, an 18-year-old construction management student at California Polytechnic State University in San Luis Obispo, explained: “I don't think my generation hates cars, but the way we look at cars is different now.
“For my parents' generation, buying a car was a big goal. Cars are still important and kids in my age group still want to drive, but we're not as auto-centric.”
Perez also feels young people today are practical and don't mind buying used cars.
“Cars are so reliable now, and more durable,” he said.
He thought Scion failed to live up to its billing as an aspirational brand. “They were kind of like re-styled Toyotas. They look different, but otherwise the Scion tC, for example, isn't that different from driving a Corolla.”
MAKING A CONNECTION
Faced with the demographics of a “sharing economy” and a generation that is - very broadly - still living at home with their parents, juggling debts and marrying later, the auto industry is having to shift gear to respond. Also, technology companies such as Apple, Alphabet and Uber are muscling in to control the cars of the future.
In the biggest Detroit-Silicon Valley crossover deal to date, General Motors is investing $500 million (R7.9 billion) in Lyft, a privately-owned ride-hailing service in the United States, and plans to develop an on-demand network of self-driving cars.
Others are responding, too, to the disruptive waves from technology and tech-savvy millennials, who increasingly want their cars to be as connected as their homes - though Paula Poveda, a 19-year-old student in Tallahassee, Florida, thinks today's connectivity acts against the need to own a car.
“We're more connected than my parents' generation and technology allows us to be in contact with friends constantly. We don't have to go out and see them all the time,” she said, adding she didn’t need to own a car, and when she did she'd probably buy a used model or get a hand-me-down from her parents.
At the recent Consumer Electronics Show in Las Vegas, Toyota and Ford said they would adopt the same SmartDeviceLink software to link smartphone apps to car dashboard screens, and invited other automakers to join them. Toyota is also exploring its own ride-sharing business model, designing smaller, easier to manoeuvre i-Road vehicles, which could be used specifically for city car-sharing services.
ONE-CAR FAMILY
The marketing chief of one Asian automaker said the changes prompted by ride-hailing and car-sharing services were a major factor in his firm's recent move to overhaul its premium brand strategy. As these apps and services gained traction, more households were likely to limit themselves to just one car, he said
“Day to day, for short commuting and doing errands, they can use Uber or similar services,” he said. “Those households would probably buy only one car and spend more money on that car. That would most likely be an upmarket car - that's where our growth is going to come from.”
Daniel Scarpato, a 25-year-old e-commerce worker who recently moved from California to Beijing, said: “A lot of my generation aren't so good at saving money.
“The job market for us isn't great, and most young people I know are in debt. Buying a new car is a bit of a luxury.”
Reuters