Bloomberg News

LOS ANGELES – Toyota’s Scion brand, created in 2003 to attract young buyers with quirky cars and low prices, is trying to revive flagging sales with the tiny iQ.

Scion is in need of a revival: Sales have fallen for four straight years, sliding 74 percent from a 2006 peak of 173,034. While deliveries of xB wagons, xD hatchbacks and tC coupes rose 27 percent in the first half, they totaled only 26,621, or less than half that of Kia Motors Corp. boxy Soul wagon at 54,987.

“Part of Scion’s problem is some others have cut into their market, and the Kia Soul would be the best example,” said Jessica Caldwell, an analyst with Edmunds.com, a Santa Monica, Calif.-based automotive pricing and data service. “In some ways, it’s a better version of xB than Scion’s.”

Toyota, which sold more vehicles than any other automaker last year, relies on Scion to attract younger customers to dealerships that also sell the company’s namesake brand. The iQ, just 120.1 inches long, is two feet smaller than a Mini Cooper and may be the most efficient non-hybrid car on the road when it goes on sale in early 2012.

Scion’s styling became more conventional when the xD replaced the original xA and the xB wagon was redesigned in 2007, said Caldwell.

“The first xB was kind of funky and out there,” she said. With the redesign, “they Camry-ed it, made it a bit mainstream.”

For El Paso, Texas, real-estate agent Rick Chumsae, who owns an original xB and an xA, the brand strayed from its roots.

“They both look a little funkier than what’s out there now, particularly the xB,” Chumsae said of his cars. “In their quirkiness, they’re kind of timeless.”

When Scion began, “it wasn’t like we set out to be weird just to be weird,” Jack Hollis, Scion’s brand manager, said in a July 13 interview in San Francisco. The target was both buyers in their 20s, as well as “youthful” older drivers, he said.

With that in mind, Scion is adding the iQ, already sold in Japan and Europe, in California in October, and across the United States early next year. The tiny model seats four and is intended as a niche model for urban commuters, said Hollis, who declined to provide an annual sales target.

Base price for an iQ is $15,995. Adding a navigation and high-end audio system, steel wheels and other accessories won’t push the price above $20,000, said Craig Taguchi, a spokesman.

The 1.3-liter engine delivers an estimated 37 miles per gallon of regular-grade gasoline in city and highway, higher than the combined average of any non-hybrid sold in the U.S.

Daimler’s Smart Fortwo coupe averages 36 mpg, Chrysler Group’s Fiat 500 averages 33 mpg and BMW’s Mini Cooper averages 31 mpg combined, according to Environmental Protection Agency data. All three require premium-grade fuel. Volkswagen’s Jetta and Golf TDI models are rated as getting 34 mpg combined using diesel fuel.

U.S. premium gasoline and diesel typically cost between 20 cents and 30 cents more than regular grade.

“We have an opportunity to define this micro subcompact segment — and be really good at it,” Hollis said. “It’s an area where people are being really underserved.”

While Scion’s overall volume has dropped, the brand still has the youngest buyers, according to TrueCar.com, a Santa Monica-based industry researcher.

About 21 percent of Scion buyers in 2009 and 2010 were between the ages of 18 and 27, the biggest portion of so-called Generation-Y buyers among brands in the U.S., TrueCar said in a study released July 6.

“What they need right now is to reinvent the brand,” said Jesse Toprak, TrueCar’s head of forecasting. “They just don’t stand out as much as they did initially on styling.”

The iQ may address that, he said.

Its futuristic baby shoe-shaped profile aims for a techno look based on “mathematical perfection,” rather than the retro styling of the Mini or 500, according to Chief Engineer Hiroki Nakajima. It has the shortest front- and rear-end overhangs in the world, he said, with two big doors that open up to reveal four seats, useable by six-footers.

“In terms of the buzz, it’s unique enough to get people back in the showrooms,” Toprak said.