Indian car sales registered a increase by 31% in July, marking the highest ever growth in recent past after economic slowdown.

The launch of new car models and cheaper loans are considered as major factors which attracted customers to automobile showrooms.

India, with population over a billion, is considered as a great potential market among the global automakers. Most Automobile majors witnessed sluggish sales in the United States, Europe and Japan due to economic slowdown.

According to data released by Society of Indian Automobile Manufacturers (SIAM), passenger car sales rose by 31 percent from 87,901 units a year ago to 115,067 units by July, 2009.

Mr. Dilip Chenoy, Director General, SIAM informed that it was the low base effect which was kicking in, but the figures were also showing the result of the stimulus package and the launch of new models. He also added that the festive season was also coming in early and that would translate into higher dealer despatches.

Indian car manufacturers attributed the hike to lower interest rates and government stimulus which allowed them to cut the prices. But also there was a concern about disappointing monsoon which could affect the demand in the coming months.

Maruti-Suzuki, the leader in the overall car segment, reported a jump of 38 per cent from 34,795 cars to 48,115 units in compact car sales.

Mr. Mayank Pareek, Executive Officer, Maruti-Suzuki, told that they had been growing at decent double digit figures over the last six months and, to that extent, that was comforting.

Hyundai Motor India, India's second-largest car manufacturer by sales, reported a near 70-per cent jump from 12,139 units to 20,491 units. On the other hand Tata Motors Ltd, which started delivering Nano, world's cheapest car, saw sales increment of its small cars from 7,525 to 8,563 units.

Honda Siel Cars India managed to increase the sales from 2,948 to 3,268 cars in July, in the mid-size category.

Overall commercial vehicle sales grew by 9.6 percent from 34,325 units to 37,624 units, ending 11 months of negative growth.

Premium and luxury cars, however, reported a decline in sales.

Car exports during the month were up 22 per cent. It remains to be seen how these will be impacted with the withdrawal of the scrappage incentives in the key European countries.

Motorcycle sales posted a jump of 19.48 percent to 546,245 units while Scooters and scooterettes saw a 24-per cent jump in sales. Two- wheeler sales hiked by 20 percent in July from 599,369 units to 719,668 units.

Car sales certainly is a very important dimension in the economic growth. But the recent dry monsoon will definitely affect car sales in upcoming months. The poor rains have come as negative news, just as India's economy started showing tentative signs of recovery.

"We have to wait and watch for the monsoon to have a clear idea of how much it will impact sales going forward," said Angel Broking's Technical Expert Jajoo.