Toyota Incentives Draw Honda Into Pricing War

#Honda

Honda may not be known for huge incentives, but that hasn't stopped the automaker from targeting Toyota with its latest promotion.

Honda's response to Toyota's recent incentives is its "Really Big Thing Sales Event," in which it offers improved deals on leasing and purchases. If leasing, Honda requires no money down and no security deposit for its entire range of vehicles. For purchases, the Japanese automaker is offering 0.9 and 1.9 percent financing on select vehicles. The promotion is scheduled to run through May 3rd.

Though Honda has entered into battle, it still has some of the lowest incentives in the industry. According to forecasting firm TrueCar, Honda's incentives will reach $1929 per car in March, much lower than the industry average of $2800. Toyota's incentives are estimated at $2318 for each vehicle it sells. Honda steers clear of steep discounts to avoid brand dilution, resulting in some of the highest residual values in the industry. However, the recent deals may adversely affect used Honda pricing. Leasing a new Honda is now cheaper than buying a used example in some cases.

Honda is spending roughly $204 million in March to bring in shoppers, while Toyota may spend up to $395 million. Those numbers are significantly lower than GM and Ford are spending. TrueCar analyst Jesse Toprak told The Detroit News that the automaker's moves are "very well calculated."

Source: The Detroit News, Automotive News (Subscription required)

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