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A Japanese interpretation of an American hotrod may seem a strange recipe for Toyota’s latest vehicle.

But the Scion Hako, a boxy, two-door concept car unveiled at the New York auto show last week, shows that the normally cautious Japanese carmaker is not averse to some risky bets with its youth-oriented brand.

Taking risks may be the best – if not the only – way for Toyota to breathe new life into Scion.

Started five years ago as a way to tap into US urban trend-setters and as an experimental laboratory for other Toyota brands, Scion has been unable to sustain its initial promise.

Sales have dropped for each of the past 16 months, compared with a year earlier.

Toyota does not disclose individual brands’ financial performance, but one prominent analyst has little doubt that last year’s sales of 130,000 units, spread across three existing models and a discontinued one, were not nearly enough to make Scion profitable.

Dave Zoia, editorial director of wardsauto.com, an industry news and data service, adds that it is hard to tell whether the recent setback is “a failure or a hiccup”.

Scion’s slippage is at least partly due to competition from a proliferating array of other small cars, such as the Honda Fit and Toyota’s own Yaris. Toyota also bungled last year by not producing any Scions for five months as a way of running down inventories ahead of the introduction of the new xB wagon and xD hatchback.

“If sales performance was our key indicator, you could say: ‘What’s going on?’” says Jack Hollis, who heads the California-based Scion division.

He forecasts that sales will pick up within the next few months, but insists that the brand has a bigger purpose for Toyota – to find ways of connecting with trend-setting youngsters.

Scion has broken new ground in marketing. It organises “street teams” to hand out invitations to parties featuring its vehicles. Scions are parked at hip nightclubs and music stores. Scion also attempts to seek out the newest trends in music.

Mr Hollis says: “We don’t want to be involved with it after it becomes mainstream. What we’re looking for is what is next.”

A marketing executive recently visited Tokyo, London, Paris and Barcelona in search of nascent trends.

But Scion is also looking at more conventional ways of regaining momentum.

While Mr Hollis says that “we want to continue to be a very niche, urban, trend-setting brand”, he acknow­ledges that a broader model range is needed.

Several possibilities are now under investigation, including tapping into other parts of the Toyota empire.

“We’re going to see which products can be adapted to the US market under the Scion name,” he says.

Conversely, Scion models could be adapted to other parts of the world.

Such moves would be in line with Scion’s willingness to take risks, Mr Hollis says.

Copyright The Financial Times Limited 2017. All rights reserved.
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