Honda Begins Expected Ramp up in Incentives

Edmunds.com spotted that at least one foreign automaker is ramping up incentives like analysts have predicted.

With its production of new models now back to normal, the site determined Honda’s average incentive spend grew to $1,871 per vehicle last month, a 12.3 percent increase over its average incentive spend in August.

Echoing reasons analysts gave previously, Edmunds.com insisted Honda has stepped up its incentives in an attempt to grab back the market share it has lost since the March earthquake in Japan.

As a result, Edmunds.com projected last week that Honda is expected to grow its market share more than any other major manufacturer in September.

The site estimated Honda captured 8.8 percent of new-vehicle sales in September, marking the company’s highest monthly market share since April.

“With pent up demand growing over the last few months of inventory shortages — not to mention the past three years of depressed sales — consumers are looking for buying signals in the marketplace, and Honda’s incentive play is one of those signals,” explained Jessica Caldwell, senior analyst at Edmunds.com.

“But whether they’re targeting a Honda or any other 2011 model year vehicle, consumers would be wise to buy now, since there won’t be a better combination of selections and prices through the end of the year,” Caldwell continued.

Overall Incentive Levels Rise in September

Looking at the broad picture, Edmunds.com found overall industry incentive spending increased slightly in September.

The site determined automakers spent an average of $2,453 on vehicle incentives last month, up less than 3 percent from August but down 4.1 percent from September of last year.

Among the top six OEMs, analysts discovered only Chrysler and Toyota decreased September incentives from August. They noted Chrysler reduced its incentive spend 2.5 percent, while Toyota dropped its spending 1.9 percent.

After Honda, Edmunds.com indicated Nissan had the biggest increase in spending last month, upping its average spend 5.1 percent from August to September.

On average, the site pointed out both South Korean and European automakers stepped back incentive spending last month, by 2.1 percent and 0.1 percent, respectively. South Korean companies offered an estimated $1,012 per vehicle in September, while European brands offered an average of $2,027 per vehicle.

Analysts went on to mention U.S. brands spent $2,990 per vehicle last month (up 2.0 percent), while Japanese automakers spent $2,127 per vehicle (down 3.2 percent).

“Edmunds.com’s monthly True Cost of Incentives 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,” site officials explained.

“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,” they added.