Passenger vehicle sales are likely to grow at over 21% to nearly 1.4 million units in the fiscal year ending 31 March, the fastest growth in three years, fuelled by strong economy, rising money in the hands of consumers and new model launches.

Sales in the first 11 months of the fiscal totalled 1.22 million, up 23% from a year ago, as more people bought compact cars and sedans.

But some analysts expect a slowdown in the March sales as customers bought more cars in the same month last year, following a price cut after the Budget.

In the previous budget, finance minister P. Chidambaram cut the excise tax on small cars to 16% from 24%.

After the cut, prices of cars such as the Maruti WagonR and Hyundai Santro decreased by as much as Rs15,000. This boosted sales in March last year by 24%, to 1,10,978 units.

Sales in this fiscal have been boosted by the small-car segment, which accounts for 77 of every 100 cars sold in the country. This segment grew 33.8% over the previous year, fuelled by the introduction of new cars such as the Chevrolet Aveo-UVA and Maruti Swift diesel.

The segment is likely to lead growth in the coming fiscal as well, analysts say.

“This is the most affordable category, and new model launches will be the driver of growth,” said S. Ramnath, vice-president at SSKI Securities.

General Motor India Ltd’s Spark, a natural gas-powered variant of Santro and Skoda Auto India Ltd’s Fabia are some the new models slated to roll out in the coming year.