MUMBAI: Passenger car sales in India have fallen at the steepest rate in 12 years, posing a significant challenge for automakers in this increasingly competitive market.

Data from the Society of Indian Automobile Manufacturers revealed a 26% drop in February compared to the same period a year earlier.

"It is now clear that there will be a decline for the whole fiscal [year]. We only hope March numbers will lessen the decline somewhat... We don't really see any change in the conditions yet," Sugato Sen, deputy director general at SIAM, told reporters.

This was the fourth consecutive month of decline as the market suffers from an economic slowdown, rising fuel prices and increasing interest rates.

A total of 158,513 vehicles were sold during the month, with sales of commercial vehicles showing the sharpest deterioration, at 35%.

SUVs, however, showed a similar rise, up 35%, although some of this may have been due to buyers acting ahead of an increase in excise duty to 30% in the budget.

Tata was one of the worst affected manufacturers as unit sales were down 69% in February. Maruti Suzuki India posted a decline of 11% and Hyundai Motor India saw sales fall 7%.

By contrast, Audi, the German luxury car maker, recorded a 29% increase in unit sales during February and said its sports utility vehicle range had led the way.

While Sen said there was likely to be no significant improvement over the next three to four months – "even new model launches are unlikely to lift sentiments," he said – he indicated that companies felt sales could pick up again in the second half of the year.

Data sourced from Wall Street Journal/Financial Express; additional content by Warc staff