The 2 biggest Japanese automakers are offering buyers an unusually high level of incentives to try to pack showrooms and regain sales market share.
Honda is offering the biggest sales incentives in its history, say online car buying research services Edmunds.com and TrueCar.com. Toyota isn't far behind.
Incentives — everything from 0% financing to cash rebates to cheaper leases — are valued in different ways, so the research sites vary in their totals. But they agree that the sales come-ons are substantially higher for Honda, the No. 2 Japanese brand in the U.S, and for No. 1 Toyota.
The 2 have typically kept incentive levels low by exercising tight discipline over production and inventory. Even their current average incentive per vehicle remains below that of Detroit automakers, but the gap is now narrower:
In September, Honda was offering an average $2,350 on new vehicles, up 6.8% over September 2010, and Toyota was throwing in $2,250, up 7.1%, TrueCar.com says.
By contrast, General Motors was offering $3,300, up 1.5%; Ford kicked in $2,850, down 6.6%, and Chrysler was at $3,350, but down 8.2% from 2010.
The Detroit 3 have moderated their incentives by getting their inventories under control, including by shedding some plants and brands and making deals with their unions. Sales inducements soared in the past decade primarily because they were overproducing.
Unusually, Honda's and Toyota's incentive spike has come even as inventories remain below normal in the wake of the Japanese tsunami, though both say they expect inventories back to normal soon.
So what's changed? Customers discovered "the product from the competition is not that bad after all," says Jesse Toprak, a TrueCar.com vice president. In the past, Toyota and Honda buyers remained loyal. Now they are willing to shop around.
"It is disturbing for (Honda and Toyota) to lose customers to other automakers," says Ivan Drury, an analyst for Edmunds.com. "They are trying to gain back what they lost."
Honda says it is simply trying to push sales volume to make up for what it lost due to the disaster. "We need to do what we can do to make that up," says spokesman Chris Martin. "It's like trying to refill that bathtub."
The No. 3 Japanese brand Nissan also lost some sales due to tsunami disruptions, but recovered faster and has actually dropped its average incentive 5.2% from a year ago to $2,750 in September.