Sales for 2008, with 3,212,342 new vehicles sold, were 46 percent of the 5.98 million sold in the record-setting year of 1990, Kyodo News reported.

"Consumer sentiment cooled rapidly" during the year, the association's director Takeshi Fushimi said.

The sales decline accelerated as the year progressed with sales of 183,549 vehicles in December down 22.3 percent compared with December 2007. Amid the downturn, Toyota Motor Corp. said it expected its first operating loss for a fiscal year, while Honda Motor Co. downgraded its 2008 earnings expectations for the third time.

Daihatsu sales fell 37.5 percent; Isuzu sales fell 14.4 percent and Nissan sales dropped 7 percent, the report said.

Japanese purchases of foreign brands also dropped, falling 16.3 percent.