DETROIT, USA - Toyota Motor Corp lowered its 2008 U.S. sales forecast to a range of 2.2 million to 2.3 million units after it saw October sales drop 26%.

Bob Carter, General Manager of Toyota's U.S. division, said on Monday that challenges facing the auto industry are expected to continue through the end of the year. Toyota had previously forecast that it expected U.S. sales of 2.44 million units in 2008.

The Japanese automaker also extended its interest-free loan promotion through November as U.S. demand for vehicles touched a two-decade low.

U.S. industrywide auto sales plunged 32% in October and the adjusted annual rate of sales, a key figure watched by economists, bumped along lows not seen since 1983 amid a severe credit crunch that has rocked U.S. consumer confidence, especially the last 10 days of the month.

Every major automaker posted sales declines in both September and October.

(Reporting by Poornima Gupta; Editing by Bernard Orr)