Scrambling to adjust to Japanese competition and a consumer shift away from the largest, most profitable vehicles, Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group are stepping up incentives on some vehicles to generate momentum in 2007 after a rough 2006, the Wall Street Journal reported.

Last week, Ford kicked off a campaign – set to run through Feb. 28 – that includes zero-percent financing on the Ford Escape and Mercury Mariner small sport-utility vehicles, which will soon be replaced with redesigned models. Chrysler is offering as much as $5,000 in consumer incentives on some 2007 model-year vehicles and “low-rate” financing on certain vehicles for the month of January under a new “America’s Hottest Products”

The campaigns were kicked off a day after Ford learned that it held off Toyota as the No. 2 U.S. vehicle seller in December despite a nearly 13-percent drop in December sales, reported the Associated Press. The Dearborn-based automaker sold a total of 231,900 light vehicles in December, with Japan’s Toyota Motor Corp. coming just below at 228,322, the companies reported last Wednesday.

But Toyota’s sales for the month rose more than 12 percent versus a year ago, leaving many analysts to believe that the U.S. automakers’ hold on the No. 1 and No. 2 spots are numbered. Many predicted that Ford would lose its spot to Toyota this year, but car sales rose enough for Ford to remain the No. 2 seller of automobiles. Toyota did beat out Ford in July and November.

General Motors Corp., the world’s largest automaker, reported December sales fell to 334,501 vehicles compared with 384,620 in the same month of 2005. For the year, Ford’s sales were down about 8 percent, due largely to a decline in truck and sport utility vehicle sales and the end of production for the Taurus sedan.

Toyota reported its best year ever for 2006, with sales up 12.9 percent for the year at more than 2,542,524 vehicles. GM’s skid in December was led by a nearly 19 percent decline in truck sales, while its car sales were down 1.6 percent. For the year, GM sales dropped 8.7 percent to 4,065,341 from 4,454,385.

DaimlerChrysler AG's U.S. sales slipped 1 percent in December due largely to a dip in Mercedes sales, the company said. Sales at its Chrysler Group rose 1 percent, but Mercedes sales dropped 10 percent.

For the full year, DaimlerChrysler's sales were down 5 percent to 2,390,585 compared with 2005, with Chrysler off 7 percent while Mercedes was up 11 percent, the company reported.

Ford's decline for the month was led by the F-Series pickup, the top-selling vehicle in the U.S., which was down 21 percent from a strong December 2005, the company said.

Ford sold 70,580 of the F-Series trucks last month compared with 89,491 in December 2005. For the year, the F-Series was down nearly 12 percent to 796,039 compared with 901,463 in 2005.

The company has said that softness in housing construction and higher fuel prices were responsible for the sales decline.

Honda Motor Co. said its U.S. sales slipped just under 1 percent in December as a decline in Honda-brand sales offset gains for Acura.

The Japanese automaker said U.S. sales of its Honda and Acura brands dropped 0.8 percent to 131,778 vehicles from 132,800 a year ago. Overall sales of its Honda brand fell to 112,722 vehicles from 114,179, while its Acura line's sales rose to 19,056 from 18,621 in the prior year's December.

For the full year, Honda said sales grew 3.2 percent to 1.5 million vehicles.

At Nissan Motor Co., a 23.7 percent increase in car sales offset a 19.7 percent drop in trucks for the company to end December with an increase of just over 0.5 percent. Nissan, which includes the Nissan and Infiniti brands, sold 91,775 vehicles last month compared with 91,253 in December of last year.

For the year, Nissan's sales were down about 5 percent. The company sold 1,019,249 vehicles last year and 1,076,670 in 2005.

GM shares fell $1.27 to close at $29.45 and Ford shares finished unchanged at $7.51 on the New York Stock Exchange, while Toyota's U.S. shares rose 99 cents to end at $135.30 and DaimlerChrysler's U.S. shares rose 62 cents to settle at $62.03.