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Toyota Motor Corp. and Honda Motor Co., Japan’s two largest carmakers, slowed the decline in domestic auto sales last month as their new hybrid models and government incentives boosted demand.

Sales of cars, trucks and buses, excluding minicars, fell 14 percent to 243,342 vehicles, the Japan Automobile Dealers Association said in a statement today. Toyota sold 110,677 units excluding Lexus brand cars, down 11 percent. Honda posted a 5.7 percent gain, and Nissan Motor Co., Japan’s third-largest automaker, sold 21 percent fewer units.

The pace of decline in auto sales slowed last month from 29 percent in April and 19 percent in May, as government subsidies and tax cuts helped boost sales of Toyota’s new Prius and Honda’s Insight gasoline-electric hybrid cars. Monthly sales may flip to a year-on-year increase as early as August, according to auto consulting company CSM Worldwide.

“The subsidies and tax cuts are kicking in,” said Yoshiaki Kawano, a CSM analyst in Tokyo. “The numbers will improve as gasoline prices were surging around this time last year, putting a damper on car sales.”

Toyota on June 25 said it has booked 200,000 domestic orders for the third-generation Prius, introduced in May. It was Japan’s best-selling standard car that month, surpassing Honda’s Insight.

Under a government program started June 19, consumers can apply for a 250,000 yen ($2,600) subsidy if they scrap a car more than 13 years old to buy a new one and 100,000 yen for a new car purchase without scrapping an old one.

Car dealers have distributed 260,000 applications for the subsidies, Takeshi Fushimi, director of the Japan Automobile Dealers Association, told reporters today. The subsidies are available retroactively for purchases from April 10.

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The government expects the incentives to lead to the sale of an additional 690,000 vehicles this fiscal year. Electric, hybrid, natural gas, and some diesel vehicles also qualify for an exemption from the country’s weight and purchase taxes.

Still, domestic sales are expected to be the worst in three decades, as wages fell for a 12th straight month and the jobless rate rose to a five-year high in May. The Japan Automobile Manufacturers Association predicts domestic industrywide sales will drop 8.5 percent to 4.3 million units in the year ending March.