General Motors Corp., the world's largest car maker, unveiled on Jan. 3 "GM Overdrive," a new incentives plan that will include cash rebates, in what could become a new battle to boost sales.

The rebates are offered on new 2001 and 2002 models, GM's North America Chairman Bob Lutz said in his keynote address at the Greater Los Angeles Auto Show.

Industry analysts say the new plan is a sign that automakers will still need to cut prices to boost 2002 sales. Lutz said the incentives will last through the end of February.

The program replaces the zero percent interest plan initiated in the wake of the Sept. 11 terrorist attacks on the United States.

"What's GM going to do for an encore?" Lutz asked rhetorically at the L.A. Auto Show. "Well, first of all, it's awfully nice to hear that question being asked.

"What this is, is General Motors doing what it should have been doing for the last 20 years," Lutz said. "We are setting the pace by leading, not following."

GM's zero percent program, which expired on Jan. 2, was very successful in getting consumers back into the showroom and buying cars. The plan was matched by crosstown rivals Ford Motor Co. and the Chrysler side of DaimlerChrysler AG.

The programs pushed the average incentive offered on new vehicles up by 71 percent in October from the same month in 2000, to nearly $2,300 per vehicle. Industry analysts say the move set the stage for more of the same in 2002, including an ongoing price or incentives war.

GM's move is recognition that without large discounts, sales of many Big Three models will probably plunge under the weight of the sluggish economy and intense competition from Japanese, Korean and European rivals, according to The Wall Street Journal.

Some industry analysts have noted that consumers are "addicted" to plentiful incentives, and that no manufacturer wants to be the first to take the away. But many analysts say current incentive levels are unsustainable over the long term.

While GM has benefited from new trucks and sport utility vehicles it debuted during the past year, analysts say it will lose money if annual U.S. light vehicles sales dip below the low end of expectations of about 15 million units.

The outlook for Ford and Chrysler is not as good, however. Both are in the midst of broad restructuring programmes that have cut or delayed new product development and led to widespread layoffs.