NEW YORK (CNN/Money) - General Motors Corp. and Ford Motor Co. said U.S. sales fell in May as the automakers suffered in a sluggish economy, but both indicated they expect strong sales ahead, prompting GM to raise its earnings guidance for the second quarter and full year.

But DaimlerChrysler, (DCX: down $0.88 to $48.50, Research, Estimates) the No. 3 automaker, bucked the trend, reporting a 4 percent increase in May sales to 216,563 units, thanks mainly to retail sales of minivans, pickups and sport/utility vehicles.

However, many of those sales were driven by promotions and the company did not provide future production estimates.

DaimlerChrysler's stock slipped in trading Monday.

Automakers, which enjoyed surging sales in late 2001 and early 2002 thanks to zero-percent financing deals and other incentives, mostly ended those programs by early spring and have returned to more normal pricing. But stiff competition could see a resurgence in incentives, though perhaps not as dramatic as last year, spokesmen for the automakers said Monday.

General Motors, the world's biggest automaker, reported a 12 percent decline in sales from a year earlier. The company, which sold 552,500 vehicles, said overall truck sales and car sales posted double-digit declines, reflecting stiff competition and tough sales comparisons with the year-earlier period. But the Detroit-based company raised its second-quarter production outlook to 1.54 million vehicles from 1.53 million. Third-quarter production is expected to rise 0.6 percent to 1.25 million vehicles.

Paul Ballew, GM's executive director for market and industry analysis, said he expects stiffer price competition industrywide, when questioned by analysts during a teleconference Monday about the possibility of new incentives and price competition.

"Everyone is going to remain aggressive in the marketplace," Ballew said. "...I think the industry as a whole is just grappling with pressure on pricing."

The company also raised its earnings guidance for the second quarter to $2.50 a share from previous guidance of $2 a share, excluding the Hughes satellite division. Including Hughes, GM expects a profit of $2.40 a share, up from $1.90 a share.

The automaker also expects 2002 earnings, excluding Hughes and special charges, of $6 a share, up from $5 a share. Including Hughes, earnings are expected at $5.60 a share, up from prior estimates of $4.60 a share.

GM's (GM: down $0.90 to $61.25, Research, Estimates) shares ended lower after surrendering earlier gains.

Meanwhile Ford Motor Co., the No. 2 automaker, said its U.S. sales fell 11.5 percent in May. U.S. customers bought or leased 329,903 Ford cars and trucks last month, reflecting declines in several brands.

The company said fleet sales rose just 2 percent last month, but retail sales to individual customers declined 15 percent.

George Pipas, Ford's U.S. sales analysis manager, called May's results an "aberration" that would correct itself next month as new products and pricing initiatives help improve demand.

"I predict that in June we'll show improved performance in the retail end of the business," Pipas told analysts during a teleconference Monday following the sales release.

Dearborn, Mich.-based Ford has been struggling with declining market share, sales and a sluggish stock price as it grappled with a difficult economy and recent concerns about the quality of its vehicles.

On May 20, Ford shuffled its management, saying former Chief Financial Officer and Vice Chairman Allan Gilmour would return to the company and replace Martin Inglis as CFO. Inglis was named vice president of business strategy, responsible for merger and acquisition activity and the company's Hertz rental car business.

Pipas said Monday that a slowly recovering economy and anticipated higher demand as well as internal company changes helped Ford improve market share in May.

"I believe our market share will be at least as high in June as in May. It's not where we want it to be. It's not where we need it to be. However, our market share is up," Pipas said.

During the month, Ford's Jaguar and Land Rover units posted the biggest gains. However other brands, such as Volvo and Lincoln, posted big sales declines.

Ford said it plans to produce 1.18 million vehicles in North America in the second quarter, up 4 percent from a year ago. Third-quarter production is expected to rise 16 percent to 940,000 vehicles.

Shares of Ford (F: down $0.34 to $17.31, Research, Estimates) fell about 2 percent Monday.

Some overseas automakers fared better in May, such as Toyota Motor Sales, U.S.A., which said it sold 169,528 vehicles, a 1.4 percent increase from a year earlier, with both the Toyota and Lexus divisions posting record results.