Mumbai: A gradually strengthening economy and a low year-ago base have helped auto makers report stronger numbers for July, signalling a recovery of sorts for the industry.

While car and two-wheeler makers continued the growth they have been showing since January—most car makers reported double-digit growth in July—Tata Motors Ltd, which sells two-thirds of the trucks and buses in India, turned in a surprisingly good performance, with a 25% increase in domestic sales. Auto makers in India only report how many units they have delivered to dealers.

Full steam ahead: A file photo of the Honda Siel Cars India factory in Surajpur, Uttar Pradesh. The firm posted a 12% growth in July. Ramesh Pathania / Mint

A Mumbai-based auto analyst at First Global Stock Broking Pvt. Ltd, who declined to be named, said the double-digit growth is an exception because July traditionally sees low sales.

Jatin Chawla, an analyst at IIFL, the research arm of financial services firm Indian Infoline Ltd, said the numbers are a continuation of the trend seen over the past six months. “The worst is definitely over."

After 12 straight months of falling numbers, Tata Motors’ sales of medium and heavy commercial vehicles grew 6% to 10,658 units in July.

Analysts, however, were guarded in their optimism given that the sale of such vehicles had halved in December in the wake of the economic slowdown and high borrowing costs.

“One expects a higher growth in the second half of the calendar as the low base effect of the previous year comes into effect," said Chawla.

Tata Motors sold 45,599 cars, trucks and buses, up 23% from the same period a year ago, in the domestic market. Car sales also included the Nano, the first deliveries of which took place last month.

Hyundai Motor India Ltd, the second largest car maker by sales, sold 23,193 cars, a 54% growth over the same period last year.

On 1 August, Maruti Suzuki India Ltd and Mahindra and Mahindra Ltd (M%M) had each reported a 27% increase in domestic sales, driven mainly by new launches.

Maruti Suzuki, with 67,528 units, reported its highest number for the calendar year so far. M&M reported sales of 21,957 units, led by a 56.4% in local sales of utility vehicles to 10,672 units.

Honda Siel Cars India Pvt. Ltd posted a 12% growth to 4,857 units.

However, sales remained flat at 168,731 units for Bajaj Auto Ltd, the country’s second largest two-wheeler maker by volume, even though its auto-rickshaw sales improved 2% to 24,104 units.

Most other two-wheeler makers reported a more robust growth, led by Hero Honda Motors Ltd, which sells two-thirds of the two-wheelers in India, and which sold 366,808 units, about 30% more than a year ago.

Driven a by 15% growth in its scooters, domestic sales at TVS Motor Co. Ltd went up 5% to 107,883 units, while the India arm of Yamaha Motor Co. almost doubled sales to 17,316 units, an increase of 47%, albeit on a smaller base.

As inventories at dealerships rise in anticipation of the festive season that starts from September, analysts expect even higher growth for two-wheeler makers.

Car makers, too, are optimistic about the coming festival season. Arvind Saxena, senior vice-president (sales and marketing) at Hyundai India, said in a statement the market is stabilizing and the firm hopes to see both export and domestic markets picking up in the coming months.