Toyota and Honda, Japan’s two largest automakers, led the second straight increase in the nation’s monthly auto sales as government incentives boosted demand.

Sales of cars, trucks and buses, excluding minicars, rose 3.5 percent to 321,737 in September from a year earlier, the Japan Automobile Dealers Association said in a statement today. Toyota, the world’s biggest carmaker, sold 139,775 units excluding Lexus-brand cars, up 9.4 percent.

Auto sales in Japan reversed a yearlong slide in August, rising 2.3 percent, as government subsidies and tax cuts helped lift demand for Toyota’s new Prius and Honda’s Insight gasoline- electric hybrid cars. For September, Honda posted a 15 percent gain while Nissan Motor Co., the nation’s third-largest automaker, sold 3.7 percent more vehicles.

“Japan’s sales will likely keep rising thanks to the incentives, until the program ends in March,” said Yoshiaki Kawano, a Tokyo-based analyst at auto consulting company CSM Worldwide. “Toward year-end, we may see double-digit growth.”

Under the government program started June 19, consumers can apply for a 250,000 yen ($2,800) subsidy if they scrap a car more than 13 years old to buy a new one, and 100,000 yen for a new car purchased without scrapping an old one. The subsidies are available retroactively for purchases from April 10. The program is due to expire at the end of March.

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 this fiscal year may be the worst in three decades due to Japan’s recession. Wages slumped for a 15th month in August and retail sales fell for a 12th month.

The Japan Automobile Manufacturers Association predicts domestic industrywide sales will drop 8.5 percent to 4.3 million vehicles in the year ending March.