General Motors and Ford are planning to lower prices and cut more production in the US as they continue to lose sales to their Asian rivals.

GM saw US sales in May fall by 5.5% on the same month a year earlier, while Ford's dropped by 3%.

May's fall in sales was the 12th straight decline for Ford and the fourth in a row for GM. GM made a loss of $1.1bn (£605m) in the first quarter of this year, while Ford saw its profits fall by 40% to $1.2bn (£660m) during the same period.

Each is also to introduce a new range of price cuts for this month, with GM promising to offer buyers the same discounts it offers employees, in addition to other incentives such as cash-backs.

Motor analysts said the price reductions would inevitably give sales a short term boost.

Overall annual US car sales totalled 16.7m in May, down from 17.7m in May 2004.