* U.S. auto sales drop to lowest level in 25 years * GM U.S. sales down 45 pct, Toyota off 29 pct * Sales in Spain, Italy, France also tumble in October

DETROIT, Nov 3 (Reuters) - U.S. auto sales plunged near 25-year lows in October, led by a 45 percent drop at General Motors Corp GM.N, with no sign the industry's year-long slump had hit bottom and doubts persisting that all the major automakers can survive.

Hurt by tighter credit and deepening uncertainty about the strength of the economy, U.S. sales fell to their weakest monthly level since 1983, based on early sales results.

European auto sales also tumbled for October, with sales declines of 40 percent in Spain and 19 percent in Italy.

Adjusting the figures for the population of the United States, GM said October was the industry’s weakest month since the end of World War Two.

Sales for Toyota Motor Co <7203.T dropped 23 percent, Ford Motor Co F.N was off 29 percent, Honda Motor Co 7267.T fell 25 percent and Nissan Motor Co 7201.T tumbled 33 percent.

“The financial crisis has generated an abrupt constraint on economic activity,” said Ford economist Emily Kolinski Morris, who added that the No. 2 U.S. automaker did not think the third quarter represented the bottom of the downturn.

Ford said it could reduce production of passenger cars and crossover vehicles in the coming weeks by cutting overtime and suspending work at some of its plants.

Industry-wide U.S. sales of cars and light trucks were on track to come in below 900,000 units in October after dropping below the 1 million threshold in September for the first time in 15 years, according to initial sales data.

That raised the stakes for a more aggressive round of discounting in November and December as automakers prepared to clear remaining 2008 model-year inventory in exchange for cut-rate financing and other incentives.

GM said it would roll out a “Red Tag” sale with lower vehicle prices and cash-back offers starting on Tuesday.

Toyota, which has overtaken GM as the global auto sales leader, launched a zero percent financing offer in October backed by a high-profile ad campaign aimed to take advantage of the relative strength of Toyota’s financing arm.

Nissan launched its own zero percent financing offer for November and December, and expressed confidence that would help its own results move higher from October levels.

“I think there’s a lot of consumer uncertainty, but you’ve also got real-world stories from dealers about how credit has tightened up all around,” Nissan division U.S. sales chief Al Castignetti said.

GM, CHRYSLER REMAIN IN FOCUS

GM’s North American sales chief Mark LaNeve said auto sales were suffering from the fallout of an “unprecedented credit crunch.”

“It was like someone turned off the lights in the month of October,” said LaNeve, who estimated that tighter consumer credit standards at GM’s affiliated finance company GMAC had cost the automaker up to 60,000 vehicle sales in the month.

The near-freefall in October sales represented the first results since word emerged last month of merger talks between GM and Chrysler LLC, owned by private equity firm Cerberus Capital Management.

GM had sought some $10 billion in government aid to support the merger, a request the U.S. Treasury Department rebuffed last week. That put the focus on whatever support the industry can win from the incoming White House after Tuesday’s presidential vote, people familiar with the talks have said.

Chrysler Chief Executive Bob Nardelli said on Monday that while Chrysler had been in talks with other parties, its recent cost-cutting actions were needed to emerge from the downturn.

“The difficult actions we have taken in the past, and those that we have just announced, are for one purpose and one purpose only: helping Chrysler survive this economic trough,” Nardelli said in a message to staff obtained by Reuters. [ID:nN03333601]

Meanwhile, auto sales were expected to fall by at least 10 percent in Germany, Europe’s largest economy, when official figures are released. [ID:nL3700856]

In France sales fell 7.3 percent. [ID:nL3640974] (Reporting by Kevin Krolicki; Additional reporting by Soyoung Kim, Poornima Gupta and David Bailey in Detroit, Gilles Castonguay in Milan; Editing by Gary Hill)