Automakers, facing lower demand for their products and declining profits, are responding in an unusual way: They’re boosting production.

Adding more supply to an already crowded inventory could mean good news for consumers, in the form of lower prices, but the move is likely to shrink automakers’ profits, which already have been contracting.

Auto sales fell 6 percent in May from a year ago and were down 2.7 percent in the first five months of the year. If inventories continue to rise, automakers might have to turn to costly rebates and other incentives to sell cars later this year.

Of particular concern to the industry is the fact that the overall May sales figure, 15.7 million vehicles on an annual basis, was a three-year low.

If June sales also come in below the 16 million mark, concerns over demand for autos could persist through next year.

“It’s going to take more work to keep up the sales volumes of earlier this year, so expect to see more incentives,” said David Littmann, senior vice president of Comerica Inc.

The concerns over waning demand are based on raised expectations. In April, the 17.3 million units sold on an annual basis exceeded last year’s comparable figure.

But the automakers seem to be ignoring the lower May sales figures, forecasting higher demand and saying they’ll boost output.

U.S. vehicle output rose 7.7 percent through June 7 from a year ago, according to Ward’s Automotive Reports.

The industry did beat sales expectations in the first four months of the year, which resulted in reduced inventories and decisions by the automakers to raise production. The companies also sought a boost to their stock prices, which have been in the doldrums.

Ford raised its output to 1.18 million cars and trucks this quarter, up from 1.13 million the same time a year ago, and General Motors Corp. is building 1.545 million units, a gain of 12 percent.

But the sales at both companies were hurt by the automakers’ scaling back their low-interest loan programs. With higher inventories, it appears they will have to prop up demand again.

General Motors said last week that it would add as much as $750 to discounts on some models, including popular ones such as the Chevrolet TrailBlazer sport-utility vehicle.

Sales this year also were aided by “income tax refunds 25 percent higher than last year,” said Littmann, “and now we’re done with them.” Sept. 11 brought on a need for sales incentives, as auto showrooms were empty after the terror attacks.

GM responded with zero-interest financing and cash discounts of $2,000 or more on slower-selling models, moves followed by other automakers.

The incentives were costly for the companies, but kept sales afloat; 17.1 million vehicles were sold in 2001, down only 1.3 percent from 2000.

“If soft sales continue through June into July,” said Paul Ballew, a sales analyst for General Motors, “we have to think about greater softness in the economy.” Other analysts say the strong sales numbers from late last year and early this year, which were spurred by incentives, may have caused the automakers to miscalculate demand.