Car sales in India reached 158,764 units in July which is a rise of 38% over the past year according to figures from Society of Indian Automobile Manufacturers.
Analysts said relatively low vehicle sales this time last year, plus India's continued economic growth, have helped the car industry.
Orders for vehicles are expected to surge later this year - especially when India's festive season peaks in early November but there are concerns this could lead to bottle necks as suppliers struggle to meet demand.
Higher interest rates and the availability of finance could also hold back growth in the sector, some analysts have warned.
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