Honda to Lower U.S. Incentives on Demand, Output Cuts

MORE: New Car Shortage - You Better Buy Now

Washington DC May 15, 2009; The AIADA newsletter reported that Honda Motor Co., outselling Chrysler LLC in the U.S. this year, plans to lower incentives after curbing production and forecasting a recovery in demand.

Bloomberg reports that the average incentive per vehicle will fall 17 percent to about $1,000 from $1,200 in the year ending March 31. Demand is likely to pick up in the second half of the fiscal year.

Honda, the only one of Japan's big three carmakers forecasting a profit this fiscal year, expects to slow the drop in U.S. sales to 4.4 percent in the period from 16 percent a year earlier, helped by the March debut of the Insight hybrid.

Last year, the carmaker boosted incentives to clear dealers' lots after the global recession emptied the nation's showrooms and pushed General Motors Corp. to the brink of bankruptcy. The company's U.S. vehicle inventory ballooned to more than a 100-day supply in the first quarter of 2009, as much as three times the historical average.

As a result, North American production will drop 8.7 percent to about 1.14 million units in the current fiscal year, according to the company. To read more about Honda's plans to lower incentives on its vehicles, click here.