According to the data released by Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales stood at 1,37,873 units in July this year as compared to 1,31,257 units in the same month of 2013.
"The negative sentiments have gone. People are coming back to showrooms. As the economy revives we are going to see higher growth in the coming months," SIAM Director General Vishnu Mathur told reporters here.
He added: "With a lot of new models lined up for launches ahead of the festive season, we are hoping that there will be at least single digit growth this year."
While he declined to give an exact forecast for car sales growth, Mathur said: "In the first quarter of this fiscal we have grown by 2.89 per cent. If the trend continues we hope that we could end the year with a growth of anything between 5 and 10 per cent."
Giving credit to the new government, he said: "The very fact that there is a stable government at Centre has improved consumer sentiment. Besides, the reduced excise duty rates on cars have been extended and also income tax rate has also been reduced to an extent which has put more money in the pockets of consumers. All these have helped revive demand to an extent."
During the month, market leader Maruti Suzuki India posted a growth of 15.45 per cent in domestic sales at 72,782 units as against 63,040 units in the same month last year.
Rival Hyundai Motor India Ltd had a growth of 12 per cent at 29,067 units as against 25,939 units in July last year.
Honda Cars India saw its sales jump 10.77 per cent to 12,286 units in July from 11,091 units in the year-ago month.
Home-grown Tata Motors posted a decline of 21.56 per cent in domestic car sales in July to 6,703 units as compared to 8,546 units in the same month last year.
Utility vehicles (UV) major Mahindra & Mahindra saw its UV sales decline 1.06 per cent to 14,348 units as against 14,503 units last year.
Car sales in India had fallen for the second consecutive fiscal in 2013-14 with a drop of 4.65 per cent as the auto industry continued to struggle with demand slump due to a sluggish economy.
In the two-wheeler segment, total sales in July 2014 grew 13.73 per cent to 12,87,462 units from 11,32,066 units in the same period of previous year.
According to SIAM, motorcycle sales during the month grew 6.17 per cent to 8,59,290 units from 8,09,386 units in the same month previous year.
Market leader Hero MotoCorp saw its domestic sales increase 10.34 per cent to 4,63,869 units as against 4,20,397 units in July last year.
Rival Bajaj Auto posted a decline of 18.35 per cent at 1,25,053 units as against 1,53,173 units in the year-ago month.
Honda Motorcycle and Scooter India (HMSI) saw its bike sales grow 5.26 per cent to 1,48,012 units as against 1,40,611 units in the same month last year.
In the scooter segment, total sales stood at 3,72,136 units as against 2,71,438 units in July last year, up 37.1 per cent.
Market leader HMSI posted a jump of 59.28 per cent in its scooter sales during the month at 2,15,965 units as compared to 1,35,584 units in the corresponding month last year.
On the other hand, Hero MotoCorp saw its scooter sales dip 7 per cent to 52,792 units from 56,798 units in July last year.
Chennai-based TVS Motor Co saw its scooter sales zoom 63.98 per cent to 57,412 units from 35,010 units in the year-ago month.
According to SIAM, the total sales of commercial vehicles (CV) were down by 13.64 per cent to 47,765 units from 55,310 units in the year-ago period.
"This is the 15th consecutive month of decline in CV sales. This sector is still a concern but we hope in the next 5-6 months this will also see revival," Mathur said.
The total sale of vehicles across categories registered a growth of 12 per cent to 15,86,123 units in July 2014 as against 14,16,182 units in the same month of 2013, it added.