Ford and General Motors are lowing prices in competitive struggle with Asian carmakers

Carmaking giants Ford and General Motors (GM) have cut their prices, trying to keep the sales on the proper level.

GM was the first to allow customers to buy 2005 vehicles at the employee rate in June. The automaker's sales jumped 41 percent that month, and Ford and Chrysler followed with their own plans in July. All of the plans were set to expire yesterday.

Ford, however, said it is extending employee pricing through Sept. 6. It is also adding some 2006 models to the plan. They include the Ford Escape, Ford Expedition, and Lincoln Navigator sport utility vehicles and the Ford Econoline van.

GM, the world's largest automaker, said it would try to lure buyers with lower prices on 2006 models. GM is hoping to wean customers off incentives.

"Regardless of what any of our competitors are doing, we think this is the right play for us," Brent Dewar, GM North America's vice president of marketing and advertising was quoted as saying by Boston Globe.

With the discounts, Ford and GM hope to lower spending on customer incentives while boosting the resale value of their vehicles.

US carmakers have been hit by tough competition from Asian carmakers like Toyota and Nissan.

Japanese carmaker Toyota announced last week that it would be raising its 2006 prices, BBC reminds.

The move, accompanied by improved warranties and other features, is designed to wean buyers from steep discounts and other sales incentives which have buoyed sales volumes and kept assembly plants running in recent months.