[kramerica_industries]

I worked for Toyota Financial Services (same as Lexus Financial Services) for 7 years, so I'd like to offer my thoughts on the Pure Price concept. (FTR - I no longer work for TFS, I was poached by Komatsu America a few years ago). Anyway, I spent many years working on the Customer Loyalty and Brand Management side of Toyota's finance company, and had lots of exposure to tremendous amounts of data, research, etc. So I just wanted to offer a few thoughts from those years. Take if for what you will . . . I'm by no means an expert in anything.

First things first to the OP: the sticker price is what you pay for a Scion, whether you buy in Chicago or New York or Los Angeles (idiot dealership aside adding crappy wheels, leather seats, etc.). We’re talking unified base pricing for any Scion model, with very few exceptions (i.e. special paint). As far as the 3.1 APR for 60 months – TOTALLY separate from the sticker price – subject to the risk of lending to buyer X vs. buyer Y, which is dependent on the individual buyer, not the manufacturer.

That said - market research supports evidence there are some advantages to the Pure Price concept (from the perspective of the manufacturer having same pricing within the same market, like Scion in the U.S.). I think it's important to consider that buyers often value very different things in the car purchase process. I'm not necessarily talking about the car itself. Obviously, those who peruse this forum tend to be much more engaged consumers than the typical car buyer (why we dub ourselves enthusiasts).

For example, some people value paying as little as possible for a new car and will do whatever it takes to negotiate what they feel to be a great deal. Some people value a smooth, minimal hassle purchase experience and are willing to pay more for such an experience. Some buyers value flexibility in financing options. Some buy whatever Consumer Reports says is a "Best Buy". Some buy what only what their father drove and would never drive anything else. Granted, I understand that such arguments are simplistic, but you get the point.

Remember GM's now-defunct Saturn brand? They also embraced a "Pure Price" (nation-wide same pricing) policy when the brand was developed and put to market in the early 90s. Most of us should be familiar with the many, many quality issues that plagued Saturn's early years. BUT, Saturn did a pretty darned good job of taking care of their customers who had these problems. The result? Saturn enjoyed significantly higher than industry average customer loyalty (read: repeat buyers). When surveyed, repeat Saturn buyers most frequently pointed to "customer service exceeding expectations" and the "no hassle pricing" when asked why they chose to repurchase a Saturn. Not quality. Not relaibility. Not styling.

Here's another good example of Brand Loyalty, also with roots in the early 90s: Lexus. At first, the luxury Japanese brand with a very attractive price point (read: high perception of value) met with some quality issues which were aggressively ameliorated. Customers were impressed with the Lexus commitment to unparalleled customer service (and the cars weren't too shabby either). Over the years, the Lexus brand positioned itself as a seller of very high quality, well-performing, ultra-reliable luxury cars. Lexus buyers don't negotiate as much (they don't need to), they lease more (to drive newer cars more frequently), and almost invariably have service work done by their dealers, thereby furthering the brand relationship. Today, Lexus has one of the highest loyalty rates of any car brand - and it's taken over two decades to do. Repeat Lexus buyers most frequently point to “great service”, “high quality,” “luxury brand image”, and “overall value” as reasons for their repurchase. Not price. Not performance. Not ease of purchase (but it’s pretty easy buying a Lexus if you’ve got the coin!).

So what's my point in all this? Simple: the Scion brand melds both the successful models I just mentioned above: clear, no haggle pricing, cars built with QDR in mind (quality, durability, reliability) and better than average customer service (Yes, yes, we've all had our dealer issues, but I'm speaking to the whole). Whether or not you like the Scion brand as distinct from Toyota, you must admit that the brand strategy has done exactly what Toyota wanted: to get younger buyers into their portfolio and build excitement and passion around the brand.

The brand retention rate for Scion owners is much higher than the demographic industry average - so they've succeeded in keeping Scion owners in the Toyota family. Younger buyers are fickle. I think that’s a good thing – it means they shop competitively – so when a young buyer remains within the brand, that brand is doing something right.

In addition, the demographic for Scion is, on average, more satisfied with the purchase process than competing manufacturers, one of the driving reasons being "ease of purchase" as related to consistent pricing along with “reliability”, “image”, and “value (think: standard feature content)”.

Personally speaking, my approach to buying depends on just what I’m buying. With my FR-S, I liked knowing that my dealer wasn’t going to try to financially rape me because the car was brand new and in high demand. I knew exactly what I was going to pay and what I was going to get for that money. I believe the FR-S to be a great value for the money relative to performance, styling, and quality (even with the issues discussed on this forum). It made the buying experience very smooth for me. And I have confidence that the issues some of us are having (DI chirping, A/C compressor tweet) with be addressed sufficiently by Toyota. After all, the GT-86/BRZ/FR-S is supposed to be a game changer – a new legacy born immediately upon its arrival. Will I think the same 20 years from now, looking back at the cars of my youth? I can’t be sure. But I sure hope so.

Best of luck with your new FR-S.

P.S. Toyota makes less margin on the sale of the Scion car itself vs. a Toyota. BUT - they have a much higher penetration into the accessories markets, where margins are much higher. So, what they don't make on the car itself, they make it upon accessories. Scion buyer gets to have a more unique car, creating an emotional attachment vis-a-vis brand identity, and Toyota builds a customer more likely to stay within the family. It works.