June 3 (Bloomberg) -- General Motors Corp. and Japanese rivals including Toyota Motor Corp. said demand for trucks and sport-utility vehicles boosted their U.S. sales in May. Ford Motor Co. and DaimlerChrysler AG's Chrysler reported declines.

Sales rose 4.1 percent at Detroit-based General Motors, the industry's volume leader, as consumers bought more GMC Envoy sport utilities and Cadillac CTS luxury sedans. Toyota increased sales 6.1 percent, while Ford sold 4.4 percent fewer vehicles and Chrysler's decline was 3 percent.

``We think General Motors just has superior products,'' said Daniel Genter, who holds General Motors and Ford debt among $1.6 billion in securities he oversees as president of RNC Genter Capital Management. ``They have completely revolutionized Cadillac, and overall have the momentum right now.''

General Motors also spent the most on rebates and incentives last month, offering an estimated $3,916 per vehicle. Ford offered $3,624 per vehicle, Chrysler provided $3,511 and Toyota spent $2,259, according to CNW Marketing Research. General Motors is seeking a third year of market share gains in the U.S. after losing ground to Japanese rivals in the past three decades.

Industrywide U.S. auto sales are expected to have risen to an annualized rate of 15.8 million cars and trucks in May from a rate of 15.7 million in the 2002 period, according to a Bloomberg survey of six analysts.

General Motors first turned to no-interest loans and other incentives to spur sales after the 2001 terrorist attacks. U.S. automakers now spend more than their Asian-based rivals, whose cars and trucks have finished better in industry quality surveys.

`Working in GM's Favor'

``The use of rebates has been working in GM's favor,'' said Adam Falcon, who helps manage a $300 million portfolio for Farmers & Mechanics National Bank that includes General Motors shares and debt. ``Ford has used incentives more selectively by comparison and that broader use has been a factor militating in favor of GM.''

Shares of Dearborn, Michigan-based Ford fell 3.4 percent to $10.69 in New York Stock Exchange composite trading. General Motors shares fell 1.1 percent to $35.95 and the U.S. shares of DaimlerChrysler slipped 11 cents to $31.65.

DaimlerChrysler, based in Stuttgart, Germany, said Chrysler probably will have a second-quarter operating loss of 1 billion euros ($1.17 billion). For the year, Chrysler expects a ``slightly positive operating profit'' before restructuring expenses, the company said in a statement.

Japanese rivals are using fewer discounts, relying more on higher quality ratings and new models to help attract buyers. As a result, Toyota has a market value of $87.2 billion, more the General Motors, Ford and Chrysler combined.

Quality

Toyota and Honda finished in the top two slots among major automakers with more than one brand in the latest J.D. Power & Associates initial-quality survey. The survey records consumer complaints during the first 90 days of owning a vehicle.

Sales of the Toyota brand grew 6.2 percent, and the Lexus luxury division posted a 5.3 percent improvement. Honda had an 18 percent increase, in part because of improved demand for sport- utility vehicles. Honda brand sales rose 22 percent, while the Acura division had a 2.1 percent decline. Nissan Motor Co. posted a 6.7 percent increase, led by the Infiniti brand.

Nissan's increase came from demand for new products such as the Murano sport-utility, 350Z sports car and G35 sport sedan and coupe, North America Senior Vice President Jed Connelly said.

``On the Nissan side we were running about 40 percent below the industry average for incentives, and Infiniti has the lowest average incentives of any luxury brand,'' Connelly said in an interview.

Ford Cuts Production

Ford said its decline in May stemmed from fewer sales to rental car companies and corporate fleets. The company said it will cut third-quarter production by 15 percent to 810,000. The company said it would produce 1 million vehicles in the current quarter after previously estimating it would build 990,000. The revised second-quarter production schedule is also a 15 percent decline from the year before.

The third-quarter production cuts won't affect Ford's full- year earnings guidance of 70 cents a share, Ford sales analyst George Pipas said on a conference call with analysts and reporters.

Chrysler said sales of its PT Cruiser fell 26 percent in May while sales of its Town & Country minivan declined 5 percent and its Voyager minivan fell 63 percent. The Auburn Hills, Michigan- based unit of DaimlerChrysler said sales of Ram pickup trucks rose 26 percent and its Liberty small sport-utility increased 17 percent.

General Motors received a boost from increased sales of trucks, including a 14 percent rise for the Silverado pickup and a 7.7 percent increase for the Tahoe sport-utility. Some General Motors cars also improved, including the Impala, whose sales more than doubled.

The automaker said it trimmed 20,000 vehicles from its planned second-quarter production in North America to 1.37 million new cars and light trucks, which reflects the lost production from the closure of a tornado-damaged factory in Oklahoma City.

General Motors also said its planned third-quarter output will be 1.225 million vehicles, down about 6 percent from 1.307 million in the same period of 2002.

Last Updated: June 3, 2003 17:17 EDT