LOS ANGELES -- Honda Division, normally known for having a light touch with incentives, has launched a major leasing and finance campaign that will run through next month.
The program, called “The Really Big Thing Sales Event,” features no money down and no security deposit on all Honda car and truck leases. Some select vehicles also have 0.9 and 1.9 percent APR financing offered on purchases. The program runs March 15 through May 3.
As far as lease incentive costs, American Honda Finance is giving shoppers “a favorable money factor,” as well as a capitalized cost reduction payout, said Honda spokesman Jon Fitzsimmons. However, Honda is not subsidizing the residual value of the vehicles, partly because Honda residual values are already strong, Fitzsimmons added.
As a result, even though Honda is spending more on incentives this month than the same time last year, it is “not a dramatic increase” from last March, said Jesse Toprak, vice president for industry trends and insights for consultancy TrueCar Inc.
Toyota is spending an estimated $395 million in incentives this month, while Honda is spending about $204 million, according to TrueCar estimates. Both figures are considerably less than what Ford and GM are spending.
“It might appear that Honda is going wild with incentives on the surface,” Toprak said. “However, the upfront cash spent is minimal. Due to the low cost of money, and the improved used car market, the actual cost of special leases has gone down substantially.”
However, cranking up short-term ease penetration can have a detrimental effect on residual values, according to Kelley Blue Book.
“With an aggressive program like Honda's, there could be more of a downward trend on the current value of used Hondas, now that it's cheaper to lease a new Honda than it is to buy a used one,” said Juan Flores, Kelley director of vehicle valuation.