Honda USA Reluctantly Boosts Sales Incentives

28 July 2006

US consumers' increasing distaste for gas-guzzling SUV's has pushed Nippon's number three carmaker further onto a battlefield it never wanted to enter - sales discounts.

Like most Japanese marques Honda has resisted the temptation to expand its incentive schemes which, while they increase sales, do so at the expense of margins.

However, the continuing reckless blitz of incentives led by the US 'Big Three' - GM, Ford and Chrysler - has left Honda and its compatriots with little choice but to play the same dangerous game.

Honda, accordingly, announced Wednesday it is to spend a further $100 million (€79.19m; £54.13m) on sales incentives in the US market this year. With just five months of 2006 remaining, this equates to an additional $20m monthly.

The decision will up Honda's total spend on US sales incentives this year to $1.15 billion. "Our spending is still much lower than the industry average, but we are seeing a slight rise for light trucks," said Honda evp Satoshi Aoki.

Coincident with announcing the upping of its US incentive budget, Honda also unveiled a fiscal first quarter result that indigenous automakers would die for: a 30% increase in April-June net profit to ¥143.40 billion ($122.7m; €97.18m; £66.4m). A weaker yen lent a helping hand.

Data sourced from Financial Times Online; additional content by WARC staff