The company had sold 45,836 units in the same month last year, Mahindra & Mahindra (M&M) said in a statement.
In August this year, M&M's domestic sales stood at 35,159 units as against 42,826 units in the same month last year, down 17.9 per cent.
Total sales of passenger vehicles, including Scorpio, XUV500, Xylo, Bolero and Verito, stood at 15,821 units as against 21,831 units in August, 2012, down 27.53 per cent.
Sales of the company's four wheel commercial vehicles were also down 3.85 per cent at 13,718 units as against 14,267 units in August, 2013, it said.
Its three-wheelers sales declined by 14.24 per cent to 5,149 units during August, 2013 from 6,004 units in the same month last year.
M&M's exports too declined by 9.03 per cent to 2,738 units during the month from 3,010 units in August, 2012.
"The auto industry which is currently going through one of its most challenging phases, is in desperate need of some short-term fiscal stimulus," M&M Chief Executive (Automotive Division) Pravin Shah said in the statement.
"The weakening rupee, resulting in increased inflation, is impacting cost of operations. Immediate action by the government is needed so as not to lose out on the upcoming festive season wherein sales could look up and bring some cheer for the auto industry and add additional revenue to the government." he added