No Fixed Abode: Barack Obama, Scion Killer

Jack Baruth
by Jack Baruth

One coupe flies, two coupes die.

By the time that Akio Toyoda was standing on that Detroit stage crowing about the triumph of the LC500, the nails were already being hammered into Scion’s coffin. The Scion tC, perhaps the best combination of practicality, style, and durability available for under twenty-five grand in the United States, will be taken out back and unceremoniously shot. The FR-S … your guess is as good as mine, but I’d be surprised if Toyota brought it over as the Celica, no matter how personally gratified I would be by such a move.

The story of Toyota’s American sub-marques could not be more different. Lexus has gone from strength to strength, effortlessly assuming a position as the thinking man’s luxury car with the LS460 while also flooding the market with Camry-platform high-profit product. Scion, on the other hand, has struggled from its first day with customer perception, dealer-satisfaction issues, and schizophrenic product planning.

Yet it’s easy to show that Lexus has been just as poorly managed as Scion; take a look at the Lexus lineup over the past 27 years and tell me that you can’t spot quite a few duffers and misfires. So why is the Official Toyota Brand of McMansion Owners soaring while the Official Toyota Brand of Dubstep Aficionados crashes? The answer, naturally, is: Barack Obama.

“The percentage of working-age Americans with a job is under 59 percent, its lowest level since 1983.” Well, that’s terrifying, isn’t it? ‘Cause I remember 1983. I was friends with 1983. And 1983 sucked. That’s just one of the terrifying facts surrounding this country’s “jobless recovery.”

Here’s another: “Wages and salaries as a percentage of GDP have been declining for over four decades. According to recent data from the U.S. Bureau of Labor Statistics, employees in seven of the 10 largest occupations typically earn less than $30,000 a year. A retail salesperson — the most popular occupation — earned an average of only $25,310 last year.”

Meanwhile, wages in the executive and financial sectors have been setting new records:

Between 1979 and 2005 (the latest data available with these breakdowns), the share of total income held by the top 1.0 percent more than doubled, from 9.7 percent to 21.0 percent, with most of the increase occurring since 1993. The top 0.1 percent led the way by more than tripling its income share, from 3.3 percent to 10.3 percent. This 7.0 percentage-point gain in income share for the top 0.1 percent accounted for more than 60 percent of the overall 11.2 percentage-point rise in the income share of the entire top 1.0 percent.

Ladies and gentlemen, with these two sets of facts I present to you: Scion Buyers and Lexus Buyers. In our modern Gilded Age, the wealthy continue to increase their buying power, while the people who serve them fall further and further behind. It’s plain to see, therefore, that when Scion’s customer base is flat broke, they won’t be buying Scions, no matter how good the Scion product might be. But that’s not the whole story. The chart at this link shows the wage gap between Millennials and their older counterparts. The average Millennial wage is below $24,000 in most of the country.

The Scion product line is deliberately targeted at Millennials in precisely the same way that the Toyota small-car product line is not, which explains why the Corolla continues to sell to senior citizens and H1-B workers while the xWhatevers rust on the lot. The fact is that if you’re earning $18,000/year or thereabouts, you probably can’t afford a new Scion even if you live at home with your parents. Payments and insurance would represent over half of what you bring home every month.

Put all of this together, and it’s easy to see why the parking lots outside Bernie Sanders rallies are filled with used cars and not brand-new Scions. It was a brand aimed at young people, and young people have been taking it in the shorts for over a decade. The blue-collar kids can’t get manufacturing jobs, because we shipped those jobs to China as part of the most-favored-nation status renewed by Mr. Clinton and supported by Mr. Bush. The white-collar kids graduate with six figures of student debt and jobs that pay less, adjusted for inflation, than anything available to their parents. Ain’t nobody buying any Scions.

“That’s all well and good,” you might respond, “but wasn’t the market for Scion always really the wealthy parents of those Millennials?” It’s possible, but the problem with that strategy is the amazing and unprecedented durability of modern automobiles. When I got my driver’s license in 1988, the average ten-year-old car was ready for the scrapheap, even if it was a Toyota. In 2016, the average car on the road is eleven years old. So parents are just giving their old cars to their children, secure in the knowledge that you can pay off a new car over seven fat years and still expect it to last seven lean years afterwards.

So why blame Mr. Obama, instead of Mr. Bush or Mr. Clinton or Mr. Reagan or anybody else from the distant past? Well, the answer is simple: the buck is supposed to stop at his desk. He’s had seven years to fix the issue and instead he’s spent those seven years enriching the Hamptons crowd. The only youth employment program this country offers in any quantity is the United States Army, and nowadays that comes with an excellent chance of losing your legs or your life somewhere in the Third World. (Those guys buy sportbikes with their money anyway.)

Mr. Obama was elected, in large part, by young people who believed they were going to change the world by voting for him. Well, the world has changed — just look at the charts — but it hasn’t been for the better. The fact of the matter is that unless the next President enacts radical change to rebalance the economic slate in this country, selling anything to young people will continue to be a losing proposition. So consider that when you cast your ballot, whether it’s in the primaries or the general, and whether it’s for Mr. Sanders, Mrs. Clinton, Mr. Trump, or Mr. Cruzubio or whatever he is. What killed Scion? Well, to quote a fellow who enjoyed his spare time with the ladies just as much as I do: It’s the economy, stupid!

Jack Baruth
Jack Baruth

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  • Bluegoose Bluegoose on Feb 04, 2016

    Congress deserves plenty of blame as well. A President can only do so much and he hasn't had much to work with in Congress for most of his administration. All of our elected leaders have failed us on this issue by not working together on these issues.

  • Dave M. Dave M. on Feb 04, 2016

    Troll all you want Jack, but for the first time in 9 years my blue collar brother is able to afford health care for all his family, not just the kids. I do wish our Congress would get their shit together though.

    • Mopar4wd Mopar4wd on Feb 05, 2016

      I've said it before basically health care for the middle class stayed on the same unsustainable trajectory it had been on before the law came into effect. But it has lowered the cost to many under the middle class. Also in an odd twist it helps the self employed and those employed by very small companies alot (if they make under a certain amount say $60,000 for a family of 4) because they can now get affordable health care more easily with the exchanges then they could on their own. Especially if your older the 30 or so where it was an issue before ACA. Also a number of companines used the ACA as an excuse to cut their medical costs just saying I know of a number that did that.

  • Wjtinfwb I'd like to see a Ford/Mazda relationship restarted. Both companies have some car guys keeping the flame alive and could develop a sports car slightly bigger than a Miata and pick and choose from each other's parts bin to put together some attractive powertrain combo's. Even a Mazda 3 AWD with the 300HP EcoBoost 2.3L, manual and AWD from the Focus RS would be welcome. Even better, a factory Miata V8 with the 480 HP Coyote (i know it wont fit...) and a manual gearbox. And how about a CX-5 with a 2.7L EcoBoost V6 with AWD and an chassis tuned for sport. Lots of possibilities.
  • Blueice Patient 28, sorry, but it is Oktoberfest. Bring a kegof Kraut beer and we will 50% you.
  • Bd2 Probably Toyota, Hyundai is killing them these days.
  • Bd2 Japan is evil, stop buying their vehicles. I hope TTAC has a holiday for PEARL HARBOR.
  • Wolfwagen If Isuzu could update this truck and keep the cost between $25K - $30K they would sell like ice pops on dollar day in a heat wave.