Japanese carmaker Subaru on Monday reported its lowest quarterly profit in the last five years. The company reasoned the poor performance due to a decline in North American sales and a rise in US incentives.

From April to June, Subaru’s operating profit fell 52 percent from a year earlier to $517.38 million.

The company’s North American sales which comprised of nearly 70 percent of its total fell 13 percent to 166,000 vehicles in the quarter in question, pulling down the overall sales 12 percent lower to 237,900 vehicles.

The Japanese automaker witnessed poor sales of its compact Forester crossover during the quarter in the US as customers expected a revamped model in the coming months.

The Japanese automaker witnessed poor sales of its compact Forester crossover during the quarter in the US as customers expected a revamped model in the coming months.

In order to push up its sales, Subaru has also been increasing buying incentives in the US, including for the Forester and the Outback crossover in order to survive amid bigger rivals. This raised the marketing costs in the first quarter. However, according to the Automotive News Data Center, US retail sales rose 7.8 percent during the quarter.

In spite of increasing vehicle production at its US plant to address a jump in demand for its cars, Subaru still imports roughly half of the cars from Japan. This increases the cost of selling vehicles in the market due to the rise in auto import tariffs in the US.

In order to push up its sales, Subaru has also been increasing buying incentives in the US, including for the Forester and the Outback crossover in order to survive amid bigger rivals.

High tariffs imposed on steel and aluminium by the Trump administration had little impact on the material costs at the company as it procures the majority of such materials locally for its US-made vehicles, CFO Toshiaka Okasa said at an earnings briefing.

Subaru maintained its prediction for its full year-profit to slide 21 percent to nearly $2.6 billion in the year through March due to higher US marketing expenses.

In Japan, Subaru in April admitted to manipulation in the mileage vehicles by the employees which added to the failure of domestic compliances it revealed in the previous year. Responding to the scandal, the company named Tomomi Nakamura as its new CEO replacing Yasuyaku Yoshinaga.