US car firms have been battling the rising popularity of foreign rivals

GM said sales had surged 41% to a total of 558,092 sales compared to the same time 2004 when it sold 380,267, boosted by an aggressive discounting programme.

Ford said sales had risen a mere 0.7% to 289,449 vehicles from 287,381 sales last year - ending 12 months of falls.

But, the news was not so good for Ford once foreign brands were excluded - without these vehicle sales fell 2.5%.

Asian rivals have been eating into the US car market recently forcing US firms to cut production, prices and jobs.

The US arm of DaimlerChrysler - Chrysler, the last of the big three US automakers - also revealed a small 1% rise in June sales.

Discount warning

But despite a bumper month for GM, analysts did sound warning bells over whether the group could sustain its performance.

The company launched its "Employee Discount for Everyone" offer in an effort to boost sales.

But while the measure may have succeeded in clearing out dealer inventories of fuel-thirsty sports utility vehicles (SUVs) like the Chevy Suburban, Tahoe and Trailblazer, experts fear the company may have sacrificed profit margins to produce bumper sale.

"We believe this is likely the most expensive marketing program ever run by GM," said Deutsche Bank's auto industry expert Rod Lache.

In May, both GM and Ford had their status reduced to "junk" by a credit rating agency - a junk status rating suggests that a company is more likely to default on its debt.

Tough conditions

Standard & Poor's decision came after GM reported a net loss of $1.1bn in the first three months of 2005, largely due to flagging sales and the rising cost of employee healthcare.

Meanwhile, rival Ford also reported a 40% drop in first-quarter net profits, to $1.21bn, citing falling US sales and rising prices for raw materials.

Furthermore despite the drastic efforts by GM to improve sales, analysts have predicted US carmakers will continue to see their sales eroded by foreign rivals who offer a wider range of new vehicles and models.

Sales figures for Japanese companies Nissan and Toyota seemed to offer support to the view.