By John Porretto
The Associated Press

DETROIT - General Motors Corp. and Ford Motor Co. intensified their incentives battle Wednesday, dangling as much as $5,000 in cash for the purchase of some vehicles following disappointing sales in June.

The new offers were widely anticipated by analysts, who say the costly enticements are needed for the nation's two largest automakers to clear out bloated inventories and try to stem declining market share. Observers also say the new round of offers is likely to create heavy demand this month.

No. 1 GM upped cash rebates to $5,000 on most 2004 trucks and sport-utility vehicles, and to $4,000 on most cars. The automaker also is offering interest-free financing for five years on most 2004 vehicles. The program runs through Aug. 2.

No. 2 Ford raised cash offers by $1,000 to $5,000 on the 2004 Freestar minivan and to $4,000 on the four-door 2004 Explorer SUV. Ford's new deals are good through Sept. 30.

European automaker Volkswagen, whose U.S. sales were off 14 percent through June, said Wednesday it too would offer zero-percent financing for certain terms on its Jetta and Passat models in July.