* Honda could see 1st double-digit sales rise in 10 mths
* Toyota sales up 7-8 pct in first 3 weeks of Aug
* Industry-wide sales flat yr-on-yr so far in Aug (Adds Toyota's sales)
TOKYO, Aug 25 (Reuters) - Honda Motor Co's car sales in Japan rose 13 percent in the first three weeks of August from the same period last year, helped by government incentives to boost auto demand, two sources familiar with the matter said.
At the current pace, Honda's monthly sales excluding minivehicles would post a double-digit rise for the first time in 10 months.
Japanese car demand dropped sharply after the economic downturn hit the country last fall, but has started picking up thanks to tax breaks and subsidies under a government initiative to promote cleaner vehicles.
Toyota Motor's sales during the same three weeks were up 7-8 percent, according to one of the sources.
The two companies have outperformed industry-wide sales so far in August, which have been flat year-on-year, the same source said. Industry-wide sales fell 4.2 percent in July from a year earlier.
Both sources spoke on condition of anonymity as Japan's car sales figures are not made public until the start of the following month. (Reporting by Yoshifumi Takemoto and Nobuhiro Kubo; Editing by Joseph Radford)