Mazda is spending more than it planned on incentives such as rebates and no-interest loans in the US to compete with bigger rivals such as General Motors, chief financial officer Gideon Wolthers said, according to The Detroit News.

Mazda is spending “slightly” more than last year’s average of “over $US2,000” per vehicle, Wolthers reportedly said without specifying the actual level though the company said in April it plans to keep average incentives below $2,000 per vehicle this business year.

“Incentive levels in the industry have been higher than I think everybody initially anticipated,” Wolthers said in a telephone interview with the newspaper. The release of the RX-8 sports car in the second half will help boost unit sales and “should favourably influence the average level of incentives we offer,” he reportedly said.

The Detroit News said since Mazda has only 1.5% of the US market, it’s forced to follow suit as bigger rivals such as General Motors raise incentive spending to record levels to boost sales. Mazda has also been trying to reduce US inventories from double the industry average, suspending production of the new 6 sedan after failing to meet initial sales goals for the model, the report added.

General Motors spent an average $3,994 per vehicle on rebates and no-interest loans in the US in July, more than any other automaker, while Ford spent $3,986 per vehicle, the paper noted.

The Detroit News said Mazda, Japan’s fifth-largest car maker, is countering a 6% drop in US sales from January to July by tapping surging demand in Europe, where profit is inflated by a weaker yen against the euro.

The tougher US market “is definitely a concern,” for Mazda, Kerry Goh, who helps manage the equivalent of $11 billion outside the US for AIB Govett (Asia) Ltd. in Singapore, including Mazda shares, told the newspaper. “The biggest driver for Mazda right now should be Europe, given the currency situation and their reputation.”

Mazda’s European sales between January and June surged 33% to 115,750 units, the Detroit News said, adding that the company plans to sell 220,000 vehicles there in 2003, a 21% gain.