Toyota, Honda Back in Incentive Game
By Michelle Krebs June 30, 2011
Toyota and Honda, confident vehicle production is returning to normal, increased incentive spending in June from May, yet the overall industry continues to spend the lowest levels in nearly a decade, according to Edmunds.com’s estimates for June incentives. Toyota and Honda are offering attractive spiffs on vehicles that customers can take delivery on, in some cases, as late as Oct. 31.
Edmunds.com’s report on the True Cost of Incentives (TCI) estimates that incentive spending by Toyota increased 30.5 percent to $1,631 per vehicle from May to June. Honda boosted its average spend 4 percent to $1,023 per vehicle over the same period. The incentives jump by both automakers comes just one month after Edmunds.com calculated Toyota and Honda spending fell 26 percent and 46 percent, respectively, in May. May sales also fell due to a real or consumer perceived lack of Toyota and Honda inventory.
“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, Edmunds.com’s director of industry analysis.
Honda’s Promise; Toyota’s Deals
On June 15, Honda introduced its Honda Promise and Acura Promise programs, 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,” said Caldwell.
If a customer selects a vehicle that is not available, they receive the current lease or financing rate in effect at the time of the sale. The program runs through Aug 1 but, depending on when the vehicle is ordered, delivery can be taken as late as Oct. 31. For instance, customers committing to a purchase in June must take delivery by Sept. 30; July customers have until Oct. 31 to take delivery. In addition, Honda is offering a $500 loyalty incentive to existing Honda owners as well as an extension of their current lease. Finally, Honda is offering free, zero-deductible extended care contract that covers repairs and maintenance items for 12 months or 12,000 miles.
Toyota nationwide is offering zero-percent financing for up to 60 months, special lease deals and cash rebates on some models, including its high-volume Camry, which is being phased out to make room for the revamped 2012 model and its Tundra pickup truck. Zero-percent financing is also available on Toyota’s other high volume model, the Corolla, which will go into production at Toyota’s new plant in Mississippi this fall. Other financing and lease deals are available on other models including the Sienna, Highlander, Venza and Avalon. Some of the deals extend into July.
Incentives by the Region and Manufacturer
Despite beefed up incentives from Toyota and Honda, overall incentives remain at nearly 10-year lows. Industry wide, incentives climbed a scant 2 percent from May to June to $2,165 per vehicle. “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 estimates 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 by 8.2 percent over the same period to $1,212 per vehicle. American automakers moved the spending needle 0.2 percent to $2,799 per vehicle, and European automakers boosted spending five percent to $1,961 per vehicle.
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