Despite offering significant discounts, Detroit automakers were losing U.S. market share to lower-cost rivals from Japan and South Korea, which are gaining ground even while offering smaller discounts.

(A) Despite offering significant discounts, Detroit automakers were losing
(B) Despite offering significant discounts, Detroit automakers are losing
(C) Despite significant discounts, the Detroit automakers lost
(D) Despite significant discounts, the Detroit automakers continuing to lose
(E) The Detroit automakers, despite significant discounts, were losing

OA: B

'Despite' is a preposition and so should be followed by a noun or noun phrase. Is "offering significant discounts" a noun phrase?