MUMBAI (Reuters) - Cars and utility vehicle sales in India grew about a third in July, their best performance in a year, thanks to new launches and easier availability of finance, raising hopes for a strong pick up in the coming months.

Workers assemble cars at Hyundai's plant in Sriperumbudur, about 45 km (28 miles) north of Chennai in this February 2008 file photo. REUTERS/Babu

The revival, which began in February after a six-month slide, has been mainly led by cars, especially in the compact segment, spurred by launches of new models such as Maruti Suzuki’s Ritz premium hatchback and Tata Motor’s much-hyped Nano.

Maruti, India’s top carmaker in which Japan’s Suzuki Motor Corp has a 54 percent stake, reported a 33.4 percent jump in July sales, also riding on strong demand for its Swift and A-Star exports.

The company, which sells every second car in India, has posted higher sales for six months in a row and its June quarter profit unexpectedly jumped a quarter, helped by lower commodity prices.

On average, July sales for Maruti, Tata, Mahindra & Mahindra Ltd, the country’s top utility vehicle and tractor maker, and Hyundai Motor India have risen by about one-third, according to Reuters calculations.

Official industry-wide figures are expected next week.

The improving outlook has lit a fire under automobile stocks, with Mahindra and Maruti leading the by way, both rising about 80 percent in the past three months.

Shares in Maruti, which has a market value of $9.1 billion, hit 1,515 rupees on Tuesday -- their highest since the company went public in 2003.

“If auto sales show further growth the stocks will rise more. I believe there is further upside to these stocks,” said Milind Pradhan, head of equities at Standard Chartered-STCI.

The auto sector index has rallied 64 percent in the past three months, more than double the 31 percent rise in the main index.

“Besides the improving finance availability in the automobile sector, it is the slew of new launches in the past few months that has helped the automakers to increase their volumes recently,” brokerage Sharekhan said in a note.

The rebound is in sharp contrast to troubles in major world markets, where sales have crumbled in the past 12 months due to an economic downturn and tight credit markets, driving U.S. firms General Motors and Chrysler to bankruptcy and restructuring.

TRUCKS IN SLOW LANE

But Indian trucks sales, which are seen as a barometer of economic activity, are yet to pick up.

Top truck maker Tata Motors, which also owns the premium Jaguar and Land Rover brands, reported a 27 percent rise in trucks sales in July, helped mainly from its small trucks. Demand for medium and a heavy trucks remain sluggish.

Deepesh Rathore, auto analyst at IHS Global Insight, said the research agency was set to upgrade its growth forecast for cars and small trucks later this year although there was the risk of interest rates rising at some point when the economic picks up.

“Our original forecast for 2009 was 5 percent. But we are watching the sales ... we will look at this month’s sales and what they have for the festive season and then we are thinking of raising our forecast to 7 percent,” he said.

The festive season starts in August and extends to October.

If crude climbs beyond $80 a barrel it will start to pinch auto sales, but rising prices of steel and aluminium will not have an immediate impact because of long-term contracts already tied up, Rathore said.

Brokerage Indiainfoline said it expected sales and profit margins to improve for at least another two quarters.