Car sales up 26% in January, seen slowing

Car sales in India rose 26% in January, defying an expected slowdown as a growing middle class, easier access to loans and a wider choice of models kept up the pace of growth in Asia's third largest economy.

Vehicle sales in India, one of the fastest growing auto markets in the world, grew 31% in 2010, but that growth is expected to slow to 15% in 2011 amid rising interest rates, fuel prices and vehicle costs.

Maruti Suzuki, the country's top carmaker, posted a 14.7% rise in January car sales -- its slowest pace of monthly growth since March.

Tata Motors, which makes commercial vehicles and cars, including the Nano, touted as the world's cheapest car, posted a 15% rise in January sales.

Utility-vehicle maker Mahindra & Mahindra said sales rose 22% from a year earlier.

Indian automakers sold 1,84,332 cars in the first month of the year, according to data from the Society of Indian Automobile Manufacturers (SIAM) released on Wednesday.

Sales of trucks and buses, a key indicator of economic activity, rose 12.6% to 60,753 units last month.

The RBI has raised interest rates seven times in less than a year and is expected to raise rates further, hurting demand for financing-reliant industries like the automotive sector.

Still, India remains an attractive market for automakers as its economy grows at nearly 9% a year, boosting incomes and driving consumer spending.