NAGOYA -- Toyota Motor has discounted the high-end Aqua hybrid as well as Lexus models by up to 100,000 yen ($934) in an effort to boost Japan sales amid a pandemic-induced slowdown, Nikkei has learned.
In addition, Toyota will take the financial hit, a move even rarer than discounting cars in Japan, rather than push the burden onto dealers.
With Toyota resorting to discounts, other Japanese automakers are likely to follow suit.
"The situation is tougher than the 2009 Lehman crisis," President Akio Toyoda said, referring to the global financial crisis that began in 2008.
The amount of the discount varies from 50,000 yen to 100,000 yen.
Toyota is also raising its sales target for 2020 by 100,000 units, to 1.4 million units.
The Aqua, C-HR subcompact SUV, Lexus UX crossover and NX crossover are among the models that are now being discounted. The campaign runs through September.
In January, Toyota set a Japan sales target for the year at 1.59 million units but later revised that down to 1.3 million due to the spread of the virus.
Toyota has long stuck to a goal of producing 3 million units every year in Japan and selling nearly half of them domestically -- an effort to protect the management of its 40,000 domestic suppliers.
With the virus wreaking havoc on Japan's economy, Toyota determined that maintaining this core strategy would be crucial and decided on the discount strategy.
While rare in Japan, promotions and dealer incentives that often result in discounts are common in North America, where the competition is intense.
According to a private research company, incentives in the U.S. are rapidly increasing due to the impact of the new coronavirus. In April, the industry average incentive amount increased 26% from the same month of the previous year to $4,297. In May, the average discount was also more than $4,000.
In Japan, incentives are shunned as the industry stays focused on profitability. This year, however, the virus's impact and the pressure on Toyota to sell 1.4 million units domestically by the end of 2020 persuaded the storied automaker to offer discounts.
Toyota in June sold 100,000 new vehicles in Japan, a 23% decrease from the same month last year but an improvement from May, when unit sales were down 33%.