Toyota Kills off Struggling Scion Brand: Time to Buy?
Thirteen years after its inception, Toyota TM is finally killing off its Scion brand of cars. The Scion lineup was built to target younger customers. Scion did this by having separate marketing methods and designs for its lineup of cars.
The cheaper prices of these vehicles appealed to younger drivers, who tend to have less disposable income. Toyota was successful in its attempt to target this demographic, as more than half of Scion drivers were under the age of 35.
In its heyday, Scion vehicles sold over 170,000 vehicles. That was in 2006, and things have gone downhill for the brand since then. In 2015, only 56,000 Scion vehicles were sold.
One appealing trait of Scion vehicles was that they were fuel efficient. Lower oil prices have had a negative impact on sales of the lineup, and this is because people are opting for bigger cars which are not necessarily fuel efficient. Toyota will start rebranding three 2017 Scion vehicles under its main Toyota brand, including the FR-S.
Should you Buy Toyota’s Stock?
While Toyota will no longer be allocating money towards the faltering Scion brand, you may want to put your money elsewhere if you’re looking to make an investment in the market. Lower oil prices will change the car buying preferences of people who may otherwise purchase a more fuel efficient car like the Toyota Camry.
Furthermore, the stock is a Zacks Rank #3 (Hold). 30 days ago, our EPS consensus estimated earnings of $3.52 per share for this quarter. Now, that same consensus estimates earnings of $3.44 per share. You probably don’t want to buy Toyota’s stock if you plan on selling your shares in the short term.
On the other hand, if you plan on holding onto the stock for a longer period of time, Toyota looks pretty attractive from a value standpoint. Toyota gets an “A” for Value in our Style Scores.
The Zacks Rank is a truly marvelous trading tool. Our ranking system has beaten the S&P 500, yielding an average return of 25% per year for the last 29 years! Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
To read this article on Zacks.com click here.
