Domestic sales of new vehicles declined 9.3 percent last year to 4.61 million, slipping below the 5 million mark for the first time in 31 years, industry bodies said Tuesday.
It was the fifth straight year of decline, indicating that the vehicle market has been shrinking due to young people shifting away from cars and the overall economic gloom.
The 2009 figure represents a plunge of 40.7 percent from a peak of 7.78 million cars sold in 1990.
"As it is difficult to anticipate a fast recovery in car demand, the situation for the auto industry is likely to remain severe for the immediate future," an official of the Japan Automobile Dealers Association said.
If the slump leads to reduced production, the unemployment rate and the economy in general will suffer.
Sales of vehicles with engine displacements of more than 660cc declined 9.1 percent to 2.92 million last year, falling below 3 million for the first time in 38 years and down for the sixth straight year, the association said.
Sales of smaller vehicles fell 9.7 percent to 1.69 million units, declining for the third consecutive year, the Japan Mini Vehicles Association said.
Passenger car sales other than minicars decreased 5.7 percent to 2.64 million, including 1.48 million compact cars with engines of up to 2,000cc, down 4.5 percent, and 1.16 million larger vehicles, down 7.3 percent.
Among brands, Lexus of Toyota Motor Corp. saw an 8.6 percent sales rise to 28,167 units on the strength of its popular gasoline-electric hybrid. Honda sales posted a 0.2 percent increase. All other brands suffered sales drops.