Honda Motor Co. will raise incentives in the United States to a record level this year to spur sales of Pilot sport utility vehicles and other aging models amid higher gasoline prices.
The average incentive to dealers per vehicle in the U.S., Honda's most profitable market, will rise to $1,000 (about ¥107,000) this year from $950 a year earlier, Chief Financial Officer Fumihiko Ike said Tuesday in Tokyo.
Honda is trying to get rid of unsold vehicles before bringing out new versions in the U.S. of the Pilot and the Acura TL and TSX sedans. Honda expects profit in its current quarter to drop as a weaker dollar reduces its repatriated earnings from the U.S.
"They should be able to maintain their ground there and see growth in other regions to offset at least some of the yen's strength," said Andrew Phillips, an analyst at KBC Securities Japan in Tokyo, who has a "buy" rating on the stock.
Gasoline prices near $3 a gallon (about ¥71 per liter) and an economic slowdown tied to the subprime mortgage crisis may push overall U.S. auto demand to the lowest in a decade.
With higher incentives, the company aims to reduce inventories in the U.S. to between 45 and 60 days of supply.