The big US carmakers, Ford, GM, and DaimlerChrysler have reported a sharp drop in US sales in July despite huge cash incentives.

Incentive schemes for US customers have failed to attract customers for US car brands.

GM, which spent nearly $4,000 per vehicle in an attempt to reduce its huge inventories, said that car sales were down 11% in July, compared to the same month in 2002.

Truck sales, which includes Sports Utility Vehicles and minivans, held up better, with a 1% decline.

GM said it would cut its North American production by 6% in the third quarter to reduce swollen inventories.

Ford, the second largest car company, reported an even sharper drop in vehicle sales, with a decline of 11.5% in the month.

And DaimlerChrysler, which lost $1.1bn in the second quarter, saw sales fall by 7% in July.

Ford had previously reported that its profits had dropped 27% in the second quarter, compared to a year earlier.

Japanese do better

Meanwhile, Japanese car sales continued to soar.

Nissan, now owned by Renault, increased US sales by 5.9%, boosted by the success of its new Murano SUV, while Subaru sales were up 8.8%, and Honda and Toyota were expected to follow suit.

Luxury brands like BMW and Mercedes also did well, with a 10% increase in sales compared to one year ago.

Ford's luxury brands, including Jaguar, Land Rover,and Volvo, also performed well.

But the sharp drop in US sales signals troubles for the unions at Ford, where the company is expected to ask for 20,000 job cuts in its 90,000 US workforce over the next few years.

The current UAW multi-year contract with Ford bans plant closures without union agreement.