General Motors, the world's largest car-maker, is extending the fierce price war among motor manufacturers in the US with a cash rebate of $2,002 (£1,380) on new cars and trucks.

The rebate replaces the zero finance deals, put in place to protect sales, which turned out to be far more popular than industry experts expected, leading to record-breaking sales figures in the last few months despite declining consumer confidence.

"We are coming off an extremely successful marketing effort and we intend to continue our sales momentum," said Bill Lovejoy, group vice president of GM North America vehicle sales. Analysts again warned that the ferocious price war between car manufacturers could bring severe damage to the industry.

It is likely that Ford and DaimlerChrysler, GM's main US rivals, will respond to remain competitive. Neither are in a strong financial position. Ford is in the midst of a restructuring under new chief executive William Clay Ford Jr while DaimerChrysler is expected to lose $2bn this year.

The big three Detroit car companies had indicated that they were keen to scale down the aggressive price war in the industry.

The latest promotion is an admission that incentives are needed to keep sales moving. Car sales have muddied the picture of consumer sales in the US and had caused a sharp spike in October.

The three US manufacturers are also coming under intense pressure from both Japanese and European car makers who are gaining market share.

GM has been the most aggressive and was also the first of the big three to introduce zero finance.