TOKYO -- U.S. car sales are sliding, so Japanese automakers are offering their dealers in the country a little extra to move vehicles off lots.
In January, Nissan Motor's average incentive spending per vehicle rose 14% from a year earlier to $3,993, while Toyota Motor boosted its incentives 6% to $2,215. But if all this icing helps Japanese automakers boost their U.S. market share from the current 30% or so, there could be a price to pay in Donald Trump's America.
According to U.S. industry researcher Autodata, carmakers in January spent an average of 16% more than they did 12 months earlier on incentives -- $3,475 per vehicle. Although Japanese automakers' incentives are lower than General Motors' $4,587 and Ford Motor's $4,144, they have increased markedly.
Honda Motor, for example, is paying 25% more than it used to -- $2,095 per vehicle.
Japanese automakers are trying to shore up their sales in a market that had seven straight years of growth through 2016 but is now slowing. Although sales incentives are small for hot-selling pickup trucks and SUVs, "dealers are competing to give discounts on sedans, in particular," said Akira Marumoto, executive vice president of Mazda Motor.
Since the U.S. Federal Reserve raised interest rates in December, some Japanese automakers have been picking up the difference in what their buyers pay in interest on car loans.
Subaru maker Fuji Heavy Industries, which had curbed its dealer enticements, at the beginning of the year estimated it would be paying an average of $1,100 in per-vehicle incentives through March. But it now expects that figure to jump to $1,650. The automaker will consider dangling an even bigger carrot depending on how the trend in auto loans goes.
There is something else pulling at new car sales. Leasing to car rental and other companies has been on the increase, and a lot of these vehicles are now finding their way into the used car market.
Kota Yuzawa of Goldman Sachs Japan said leased cars now account for a little more than 30% of the used car market, up from nearly 10% immediately after the 2008 global financial crisis. When leased cars pour into the used car market, Yuzawa said, they put downward pressure on prices.
The trend also hurts new car sales.