(Adds industry official comments, details)

TOKYO, Jan 5 (Reuters) - Automobile sales in Japan, excluding 660cc minivehicles, plunged 22 percent in December from a year earlier to the worst level on record for the month, capping a dismal 2008 when demand fell to a 34-year low.

December sales of new cars, trucks and buses totalled 183,549 vehicles, the Japan Automobile Dealers Association (JADA) said on Monday, with all brands recording a drop.

Combined with sales of minivehicles, which fell 6.7 percent to 122,770 units, Japanese auto sales slid 17 percent to 306,319 vehicles. [ID:nT89465] [ID:nTKB003241]

"We never imagined sales would fall this badly," JADA Director Takeshi Fushimi told reporters. "This is a bleak situation."

Fewer Japanese are buying cars every year as more people populate urban areas where trains and buses are the preferred mode of transportation. A shrinking population and diminishing interest in cars among young people are also driving down demand.

The weak economy is not helping, but Fushimi said a lack of financing was not behind the fall in Japan, unlike in many other markets, where sales have been hit by tight credit.

For all of 2008, sales of non-mini vehicles totalled 3.21 million units, down 6.5 percent from last year, marking the fifth straight year of decline.

Last month, the Japan Automobile Manufacturers Association (JAMA) projected a fall in demand for new automobiles in 2009 to 4.86 million vehicles -- the first drop below 5 million in 31 years.