Nissan, Toyota Plan New Sales Incentives

Nissan Motor Co. and Toyota Motor Corp. are launching new incentives to spur U.S. sales of cars and trucks, even though dealers have been concerned recently about supplies of vehicles from Japanese auto makers.

Nissan on Thursday told its dealers in a memo that its supply of vehicles at U.S. dealerships had grown in May from April, and as a result the auto maker is offering subsidized leases and lower pricing on its Altima and Maxima sedans and many of its trucks, reported The Wall Street Journal.

Nissan had geared up production heading into 2011, in expectation of rapid growth this year. As a result, it is still delivering healthy supplies of vehicles to dealerships, while Toyota and Honda Motor Co. are struggling to maintain inventories. All three companies have had to slow production in the last two months following the March 11 earthquake that shook Japan and forced factories across that country to close.

At the beginning of May, Nissan dealers had 175,913 cars and trucks in stock, up about 3,000 from the month before, according to market researcher Autodata Corp. Toyota's inventory was 277,658 vehicles at the start of May, down from 352,153 the previous month. Honda's was 172,487, down from 236,034.

Nissan's sales grew rapidly in the first three months of the year, thanks to a program that paid dealers bonuses for hitting aggressive sales targets. But in April, after the campaign ended, its sales slowed. Nissan's new incentives are designed to return the company to faster growth.

"Despite this successful sales increase, the Nissan division lost market share [in April] as the total industry was up 17.9 percent. This result does not match our ambition as we have consistently achieved market share gains over the last few years and this is a trend we intend to maintain," Al Castignetti, vice president of the Nissan division said in the memo. "The main message I want to deliver to you is that here in the U.S. Nissan is in a much healthier position than either of our two main Japanese competitors."

Nissan also reported higher fiscal fourth-quarter earnings Thursday in spite of the earthquake. In the three months ended March 31, Nissan posted a profit of ¥30.8 billion ($380.6 million), up from a loss of ¥11.6 billion in the same period a year earlier. Nissan's sales grew 10 percent in the quarter to ¥2.351 trillion from ¥2.138 trillion. Operating profit rose 7.2 percent to ¥88.6 billion from ¥82.7 billion.

Toyota is launching its own raft of new sales incentives. In the past several weeks, it had offered virtually no discounts on any of its models as it tries to conserve inventories.

But with the announcement yesterday that it would ramp up production in North America next month to 70 percent of its normal volumes, the company is trying to avoid deeper market share losses. Toyota's sales were flat in April and without incentives, May results could have been worse.

Throughout the crisis in Japan, caused by the March 11 earthquake, Nissan has been in a stronger position. Its dealerships in the U.S. had more existing inventory on lots than its two Japanese rivals and it makes more of its top-selling models in North America.

Unlike Toyota and Honda, which are still running at 50 percent or less capacity at plants in North America, Nissan has had only a few down days as its supply of parts has been less affected by Japanese suppliers.

Toyota and Nissan indicated this week that their supply situation appears to be improving. Honda has not yet updated its situation. Its plants in the U.S. have been operating at 50 percent volume and as of yesterday, there were no plans to raise production, said spokeswoman Christina Ra. Honda has very limited incentives on its models in May.