Car sales in India surged 38 percent in July to hit a best-ever monthly total of 158,764 units, as the consumers were lured by new models and cheap finance.

"New model launches, penetration of rural markets and the availability of finance continue to boost sales," Society of Indian Automobile Manufacturers (SIAM) director general Vishnu Mathur said in New Delhi.

Sales of trucks and buses grew 37 percent to 51,481 units.

Vehicle sales -- seen an important indicator of economic strength -- have been on a roll in India as the country rebounds from the global financial crisis with economic growth seen at 8.5 percent this year.

But growth in China's auto sales slowed in July from the previous month, China Association of Automobile Manufacturers said, as the economy slowed and government stimulus measures including car-buying incentives were scaled back.

Passenger car sales rose 13.6 percent from a year earlier to 946,200 units in July, marking a deceleration from breakneck growth rates earlier.

Total vehicle sales rose 14.4 percent year-on-year to 1.24 million units in July, the first time this year that the growth rate was below 20 percent, the China Association of Automobile Manufacturers said on its website.

Automobile analysts, however, said the Chinese vehicle sales outlook was still extremely bright.

"We are still talking double-digit growth in the medium term, there is still huge pent-up demand, a huge population and very, very strong fundamentals," Paul Newton, analyst at London-based Global Insight, told AFP.

Global automakers such as General Motors, Ford and Volkswagen have been rapidly steering to China and India, eyeing low vehicle penetration in the two emerging market giants where many consumers are buying their first vehicles.

"The overall economy is buoyant so that is helping support the market," said Vaishali Jajoo, analyst at Mumbai's Angel Broking.

Analysts forecast Indian car sales will keep humming with the country's looming festival season which peaks in early November with Diawali, the Hindu Festival of Lights, when it is considered auspicious to make purchases.

"You've got incomes going up, new launches, good industrial activity, the festival season -- that's all going to keep the sales momentum going," said Bharat Gianani, analyst at Asit C. Mehta investment house.

But analysts warned capacity hurdles could constrain the pace of growth as Indian automakers already are already manufacturing at full-tilt.

The Indian automobile association has forecast year-on-year car sales growth will total 13 to 14 percent for the financial year to March 2011 to 1.7 million units, but many analysts regard the figure as conservative.

India is still a minnow compared with China in terms of overall sales.

Dong Yang, a top official of the China Association of Automobile Manufacturers, has predicted full-year vehicle sales will top 15 million units this year compared with 13.64 million units in 2009 which sent the nation past the United States as the world's top auto market. .

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