Incentive Spending Confirms Toyota and Honda are Back on Road to Recovery, Reports Edmunds.com
SANTA MONICA, Calif. — June 30, 2011 — Increased incentive spending in June by Toyota and Honda indicate that the two Japanese automakers are turning a corner with their respective production issues, reports Edmunds.com, the premier online resource for automotive information.
Edmunds.com's report on the True Cost of IncentivesSM (TCISM) 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 (http://www.edmunds.com/about/press/incentives-on-small-cars-continue-to-plummet-reports-edmundscom.html).
"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."
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Edmunds.com found that overall spending by all Japanese automakers increased 9.1 percent from May to June to $1,510 per vehicle. By comparison, South Korean automakers decreased their spending a total of 8.2 percent over the same period, to $1,212 per vehicle. American automakers upped the spending needle 0.2 percent to $2,799 per vehicle, and European automakers boosted spending five percent to $1,961 per vehicle. Industry-wide, incentives climbed two percent in June to $2,165 per vehicle.
"Despite the increases, overall incentive spending across the automotive industry continued at a very conservative pace in June," said Caldwell. "We haven't seen a run of spending this low in almost a decade."
Edmunds.com's monthly True Cost of IncentivesSM (TCISM) report takes into account all automakers' various U.S. incentives programs, including subvented interest rates and lease programs, as well as cash rebates to consumers and dealers. To ensure the greatest possible accuracy, Edmunds.com bases its calculations on sales volume, including the mix of vehicle makes and models for each month, as well as on the proportion of vehicles for which each type of incentive was used.
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