Car sales jumped 70.3 per cent compared to the same month of last year, truck sales 25.39 per cent and those of two-wheelers 14 per cent as economic revival combined with new product offerings to stoke demand.

"The August numbers are excellent. It is indicative of agood demand situation and the strong recovery process," said Taher Badshah, automobile analyst at Motilal Oswal Securities.

The economy has shown signs of emerging from a slowdown in recent months. Industrial output rose 5.4 per cent in the period from April to July, compared with a year earlier.

But some analysts warn the signs must be read carefully.

The Society of Indian Automobile Manufacturers (SIAM) said on Thursday 12,302 trucks were sold in August, compared with 9,811 a year earlier, car sales rose to 57,924 units from 34,016 and those of two-wheelers to 302,284 from 265,389.

It said that in the period from April to August, truck sales rose 21.5 per cent to 54,993 units from the same period last year, car sales grew 46 per cent to 241,982 and those of two-wheelers by 6.3 per cent to 1.43 million.

With the end of the monsoon and onset of the festival season, sales are expected to grow further, but full year rates will be tempered as the figures are based on a particularly difficult first half in the fiscal year to March 1999, analysts said.

The launch of new models late last year in the fastest growing small car segment spawned a price war and expanded the market.

Much of the car sales growth in the period from April to August was sparked by sales of Hyundai Motors' Santro, Daewoo Motors India's Matiz and Tata Engineering & Locomotive Company's Indica.

The three manufacturers cumulatively sold over 51,000 cars in the latest period compared to just about 5,000 a year earlier.

"Small cars have become more affordable and the overall market has expanded. Even Maruti has benefited," said analyst Marvin Fernandes at Kotak Securities.

Maruti Udyog Ltd, a joint venture of the government and Japan's Suzuki Motor Corp which has more than an 80 per cent share of the country's car market, cut prices last December, triggering a price war in the small car segment.

"Maruti achieved its all-time high monthly sales in August 1999, including those of the 800, Omni and Zen models," said a company spokesman.

Maruti sold 37,840 cars last month, up from 28,867 the previous August.

An economic revival has raised freight volumes in the last six months, boosting freight rates about 12 per cent and fuelling demand for bigger trucks from fleet operators, said Badshah.

But sales of smaller trucks have been flat because of overcapacity and are likely to stay that way in the full year, analysts said.