Jan. 6 (Bloomberg) -- Toyota Motor Corp. and Honda Motor Co. said U.S. sales plummeted by more than a third in December as the recession and weak consumer confidence ended annual gains for Japan’s two largest automakers dating to the mid-1990s.

Toyota, poised to grab the global sales title from General Motors Corp., slid 37 percent, while Honda tumbled 35 percent. Nissan Motor Co., No. 3 in Japan, fell 31 percent and Hyundai Motor Co., South Korea’s biggest carmaker, plunged 48 percent.

“The best thing about 2008 is that it’s over,” Jim Lentz, president of Toyota’s U.S. sales unit, said in a conference call yesterday. “We’re in the middle of the most challenging, volatile market we’ve ever faced.”

The federal rescue of GM and Chrysler LLC on Dec. 19 couldn’t overcome buyer pessimism and tight credit last month in the world’s biggest auto market. Industrywide sales fell 36 percent as job losses mounted and consumer confidence waned.

Still, Asian brands raised their combined market share 0.4 point to 41.7 percent in December, up 0.4 point from a year earlier, according to an estimate by industry-analysis firm Autodata Corp. of Woodcliff Lake, New Jersey.

Toyota’s sales fell 15 percent for all of 2008, its first such decline since 1995. Tokyo-based Honda hadn’t posted a drop in the market since 1993. Its 7.9 percent decline for the year was the smallest among major automakers, followed by 11 percent for Nissan. Industrywide sales fell 18 percent.

Toyota said today it will halt production at its 12 factories in Japan for 11 days in February and March in response to the drop in demand.

‘One of the Worst Years’

“It’s one of the worst years ever, and this year will be worse,” said Stephanie Brinley, an analyst at consulting firm AutoPacific Inc. in Southfield, Michigan. “It’s not a gas problem. It’s not a credit problem. It’s a consumer-confidence problem, and it’s worldwide.”

GM’s sales dropped 31 percent, Ford Motor Co.’s were down 32 percent and Chrysler’s plunged 53 percent. Last year also marked the first time the combined market share for GM, Ford and Chrysler fell below 50 percent. The three companies held 47.5 percent of their home market in 2008, compared with 51.1 percent a year earlier, Autodata said.

U.S. Market Share

Toyota’s U.S. deliveries plummeted to 141,949 in December from 224,399, as it failed to get a boost from no-interest loans offered on most models since Oct. 2. Sales of its Prius hybrid, the best-selling gasoline-electric car in the U.S., fell 45 percent. The Tundra full-size pickup dropped 52 percent, while Toyota’s Lexus luxury brand finished the month down 32 percent.

Toyota’s stock gained 1.3 percent to 3,050 yen at the 3 p.m. close of Tokyo Stock Exchange trading. Honda rose 1.7 percent and Nissan fell 2.4 percent.

Toyota’s market share slid 0.3 point to 15.8 percent last month. The Toyota City, Japan-based company accounted for 16.7 percent of U.S. new-vehicle sales for all of 2008, No. 2 behind GM, according to Autodata.

Honda, which is second in Japan behind Toyota, said U.S. sales slid to 86,050 in December from 131,792 a year earlier. Honda’s market share for the month was up 0.1 point to 9.6 percent, and it rose 1.2 points to 10.8 percent for all of 2008.

U.S. vehicle sales for the year totaled 13.2 million, the lowest total since 1992, Autodata said, down from 16.1 million.

No Buying

“We are at the bottom now,” said Tom Libby, an automotive analyst at consumer-research firm J.D. Power & Associates in Troy, Michigan. “People have just stopped buying and I don’t blame them. When you have such a decline in savings and net worth, it just doesn’t surprise me sales have fallen so much.”

U.S. jobless rolls reached a 26-year high in the week ended Dec. 20, signaling a worsening labor market as the economy heads into the second year of a recession. That weakness adds to the strain on automakers after record fuel prices in 2008’s first half damped demand for full-size pickups and sport-utility vehicles.

The Conference Board’s sentiment index, which measures consumer confidence, fell to the lowest level in 41 years last month as Americans grew more concerned about keeping their jobs and paying their mortgages.

Nissan, Hyundai

Tokyo-based Nissan sold 62,102 vehicles, down from 89,555 a year ago and finished the year with U.S. sales of 951,350 units.

“In 2009, we’re hoping credit eases up and banks start lending money again,” Al Castignetti, vice president of Nissan’s North American unit said in an interview yesterday. “Our traffic was pretty good all month compared with November, when there were days no one was coming into dealerships.”

Hyundai, seventh in the U.S. by volume, sold 24,037 vehicles last month, down from 46,487. For the year, Seoul-based Hyundai’s sales dropped 14 percent.

Citing tougher economic conditions, and hoping to spark sales, Hyundai yesterday announced a program to buy back autos within 12 months of purchase from customers who experience an “involuntary loss of income.”

Kia Motors Corp., Hyundai’s affiliate, posted a 39 percent drop in December, Mitsubishi Motors Corp.’s sales fell 23 percent and Suzuki Motor Corp.’s sales fell 50 percent. Isuzu Motors Ltd., a Japanese truckmaker that ends U.S. passenger vehicle sales after this month, sold 188 trucks last month, down 62 percent.

Fuji Heavy Industries Ltd., maker of Subaru brand cars, had a 7.7 percent drop last month. Still, the Toyota affiliate was the sole Asian brand to increase U.S. sales last year, up 0.3 percent.

Auto sales in Japan dropped 5 percent in December and finished the year at a 28-year low as a recession there sapped demand for Toyota and Nissan vehicles.

To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net; Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net

Last Updated: January 6, 2009 02:34 EST