The new lower-luxury niche includes Mini, the front-wheel-drive Mercedes-Benz CLA arriving this fall and Audi's compact A3 sedan shown last week on the eve of the New York auto show.
Scion has gone after young entry-level buyers since its inception 10 years ago but has lost its early momentum.
"Everybody is looking at what direction Scion should go," said Jim Lentz, CEO of Toyota's North America Region. "We have to take a real hard look at what the future of the industry looks like strategically, and where we want Scion to play."
Scion, not Lexus, may be the way Toyota meets the new premium competition typified by the CLA, which will start at under $30,000, not including shipping. The Toyota brand, which has 18 nameplates, may be too product-heavy to compete in the mass market and join the entry-luxury fight as well.
And Lexus has refused to drop below the $30,000 price point.