News from Notch Consulting, Inc.

July 5, 2011

Toyota and Honda increase incentives in US in a sign that production woes are easing

Filed under: General — Notch @ 12:24 pm

According to Edmunds.com, increased incentive spending in June by Toyota and Honda indicate that the two Japanese automakers are turning a corner with their respective production issues. The company’s report on the True Cost of Incentives found that incentive spending by Toyota increased 30.5 percent to $1,631 per vehicle from May to June. Honda, meanwhile, boosted its average spend four percent to $1,023 per vehicle over the same period. The incentives jump by both automakers comes just one month after Edmunds.com found Toyota and Honda spending fell 26 percent and 46 percent, respectively, in May.

“By kicking up their incentive spending, Toyota and Honda are sending a clear message that production levels are starting to return, even if those vehicles haven’t yet hit dealer lots,” said Jessica Caldwell, director of industry analysis at Edmunds.com. “Honda, for example, introduced its Honda Promise’ program which lets car buyers lock in incentives on a new car now, even if the car can’t be delivered for another several weeks. With this program, Honda is not only demonstrating a confidence in its recovery, but also making a strong play to protect its market share.”

In related news, Edmunds.com estimated at 1,093,000 new car sales (including fleet sales) are expected for June 2011, representing an 11.2 percent increase over June 2010 and a three percent increase over May 2011.

The estimated sales volume translates to a Seasonally Adjusted Annualized Rate (SAAR) of 11.9 million in June, according to Edmunds.com analysts. Even with SAAR coming in below 12 million for the second month in a row, Edmunds.com continues to project an annual SAAR of 12.9 light vehicle sales overall in 2011.

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