India, which has been one of the world's fastest-growing car markets in recent years, suffered a slowdown in demand in 2011 as many buyers decided to defer purchases or cancel them due to costly loans and rising fuel expenses.

"The March data shows that the industry is starting to get out of its rut from the problems it faced last year," said Mahantesh Sabarad, auto analyst at Fortune Equity Brokers.

Maruti, Ford, Honda and Volkswagen all posted record sales by their Indian operations, while Tata Motors saw record sales in its flagship small cheap car, the Nano.

Honda Siel Car India said its sales for March soared 208 percent to a record 11,016 units while US car giant Ford's Indian subsidiary posted record sales of 12,148 cars, up nearly one percent from a year earlier.

Volkswagen sold a record 8,326 vehicles, up 2.8 percent year-on-year, led by its Polo and Vento cars.

Although Tata Motors' car sales were at a non-record 38,399 vehicles, they were up 30 percent from last year and included sale of a record number of Nanos, billed as the world's cheapest car.

Maruti, majority-owned by Japan's Suzuki Motor Corp, saw sales climb 3.3 percent year-on-year to a record 125,952 vehicles, with business strong in hatchbacks as well as the larger DZire car and its utility vehicles.

But despite this third straight monthly gain, sales for the financial year to March 31 fell nearly 11 percent to 1,133,695 units.

The company lost production of 106,000 vehicles between June and October due to a crippling labour dispute at one of its plants in the northern Indian state of Haryana.

South Korean giant Hyundai Motor's local subsidiary, the second-largest carmaker in India, said March sales rose 6.61 percent with 59,229 units.

Analysts have forecast car sales in India to continue to improve in the coming months as the central Reserve Bank of India is expected to lower interest rates, reducing car financing costs.

"Growth in March has been led by a rise in diesel-engine capacity from manufacturers and an improvement in sales of petrol models," said Hitesh Goel, analyst at Kotak Securities.

A big portion of India's car market is held by diesel cars, whose fuel is still heavily subsidised by the government.

Customers sought to buy cars before new government taxes imposed in last month's budget on some segments of the market took effect.

India's Society of Automobile Manufacturers forecasts car sales will grow 11-13 percent in the 2012-13 financial year.

Source: AFP