Nov 17 2015
If you've seen Scion's latest ad campaign for the iA and iM featuring James Franco, Jaleel White and Car Dealership Tubeman, then you may have noticed that they are really pushing their business model of a single-trim approach. The campaign's tagline states, "standard features that actually come standard." With Scion, there is no such thing as à la carte -- except for a few accessory add-ons -- and it's been that way since they started in 2003.
Why is it that just Scion limits all of their vehicle models to a single trim and standard equipment? Could this strategy work for other manufacturers (OEMs)?
In this post, we've highlighted some of the pros and cons to help shed some light on why more OEMs haven't adopted this strategy and if this could be a feasible option in the future.
If each vehicle model had one single trim, dealerships would not be required to carry dozens of each vehicle model. For example, each Ford model has between 3-6 trims, anywhere from 1-20+ different styles (factoring their Super Duty trucks), 3-9 different exterior color options, and a plethora of optional equipment. In order for a dealer to carry every possible model configuration on their lot, they would require a lot the size of Rhode Island (slightly exaggerating). Decoding vehicles to a single style can also be a challenge for dealers since the trim, body style, and transmission are not always encoded in the VIN number. It's nice that Ford and other OEMs allow customization, but it certainly doesn't make inventory management simple.
Some vehicle manufacturers, such as Honda, have made it slightly easier to carry all configurations on the dealer lot with fewer options to choose from. Scion inventory is by far the easiest to manage with one single trim and body style for each model with no options or option packages.
One of Scion's primary reasons for limiting each of their vehicle models to a single trim is to make vehicle shopping easier for their target buyers (first-time car buyers). With all the features standard for each vehicle, it's much less daunting for first-time buyers to choose a vehicle. There is very little fluctuation in price range, other than the transmission and a few interior and exterior accessories. Still, the transmission type and accessories do not increase the total price by thousands, as do the different trims and optional equipment available for most OEM vehicle models.
With multiple trims, styles and options, by the time a shopper selects all the features they need or want, the total cost could be $10k and up from the base price. There are no surprises when it comes to a single trim vehicle model.
If all vehicle manufacturing plants were able to produce all of their vehicle models with the same configurations and allow the dealer to add or swap out accessories, production would be far cheaper. This would allow OEMs to make vehicles more affordable. As Scion is targeting a younger crowd who are looking for a nice new car with sporty features at a lower cost, a single-trim strategy allows them to accomplish this goal. However, as covered in the next point, offering a single trim and style would limit other OEMs' audiences.
Offering vehicle models with one trim level would simplify inventory management for the dealer and make vehicle shopping easier, however, it would limit the OEMs' prospective buyers significantly. Many vehicle shoppers like having different options to choose from, whether that's certain luxury items, advanced safety features or other technology packages.
Scion is ok with narrowing their scope to first-time buyers that have a lower budget and are looking to buy new. However, it would not be a smart business move for many other OEMs to limit their model selections, as they are marketing to a much broader range of vehicle shoppers -- many of which are willing to pay for customization.
OEMs face one big challenge by offering multiple trims and options for each vehicle model. How do they create an online shopping experience that doesn't overwhelm their users? Fortunately, there are various vehicle shopping solutions available, including our PerfectFit Vehicle Shopper, that help overcome this challenge. DataOne's PerfectFit Software and API assist prospective buyers in finding the right vehicle based on their needs and wants. This solution works well with dealer and OEM websites, as well as online classified listings sites.
Without multiple trim levels and optional equipment, dealers are left with little ability to upsell. Offering base model vehicles helps dealers get a larger number of vehicle shoppers in the door. And often times these shoppers will upgrade their vehicle selection piece by piece, arriving at a price they may not have considered from the beginning. There are also plenty of vehicle shoppers who are willing to spend money on a loaded car with all the bells and whistles. Take a look at some of these luxury features as a perfect example.
If every OEM took a single-trim approach, there wouldn't be much room for buyers to customize or choose their own experience. For such a big purchase, pricing tiers are very important.
As you can see, there are advantages and disadvantages of a single-trim approach for both the seller and buyer. After identifying some of the major pros and cons, I can't see OEMs switching over to single trim vehicle models anytime soon, if ever. The ultimate goal for most OEMs is to attract a wide audience of buyers by offering something for everyone at different price points. Unless they change their strategy by dedicating certain vehicle models to target audiences --like Scion has done with all of their models-- then there is no reason to switch to a single trim business model.
We would love to hear your opinions on this subject in the comments section below. Please share!
Photo Credits: Wikimedia.org, Concavo Wheels, zombieite