Sales are down 2.3 per cent so far this fiscal year that began in April, as high interest rates, rising fuel prices and increased input costs for manufacturers deter first-time buyers and harm small-car sales, the biggest segment.

Demand for cars in India, where sales grew 30 per cent in the 12 months to March 2011, shrank in July for the first time in nearly three years, and continued to slide for three consecutive months, falling by the most in over a decade in October.

Indian automakers sold 159,325 cars last month, data released by the Society of Indian Automobile Manufacturers (SIAM) showed. Total sales for 2011 stood at 1.95 million vehicles, an annual rise of 4.2 per cent.

Sales of trucks and buses, a key pointer to the country's economic activity, rose 14.5 per cent in December from a year previous to 72,192 vehicles.

Asia's third-largest economy is a key growth market for global automakers that have seen demand hit by economic turmoil in developed markets. Firms such as Ford Motor Co and General Motors Co have ramped up activity in the country.

Executives at a recent auto event said the slowdown is a passing phase caused by macroeconomic factors such as high interest rates and sluggish GDP growth, but cautioned that a return to sales seen in previous years would not be easy.

Rising prices of fuel and materials such as steel, aluminium, plastics and rubber have pushed up costs and dented demand.