Car sales in India rose 21% in September as the onset of several festivals and easing borrowing costs led customers to buy vehicles from Maruti Suzuki India Ltd. (532500.BY), Hyundai Motor Co. (005380.SE) and General Motors Co.

Sales in the past month climbed to 129,683 cars from 107,517 a year earlier, showed data issued Tuesday by the Society of Indian Automobile Manufacturers, an industry lobby group.

This is the eight straight month of growth in car sales and follows August's 26% and July's 31% jump, which was the biggest percentage gain since February 2007.

Higher lending rates and banks' reluctance to lend for buying automobiles in a slowing economy had crimped demand for automobiles in India last year. But, a series of government stimulus packages, including tax cuts, earlier this year to lift the economy and lowering of loan rates by banks are now encouraging people to buy new vehicles.

Sales in September received a boost also from the start of several Hindu festivals, which are considered auspicious for buying new vehicles.

"The overall recovery in the Indian auto sector continues due to a sustained improvement in demand," Vaishali Jajoo, analyst at Angel Broking Ltd. said in a recent note. "This is due to improving macro-economic factors such as expanding liquidity, lower interest rates and rising consumer confidence."

"We expect this economic recovery to help the auto sector, which includes passenger vehicles, commercial vehicles and two-wheelers, in registering good growth in the domestic market," Jajoo said.

Sales of Maruti, India's biggest carmaker by sales and the local unit of Suzuki Motor Corp. (7269.TO), rose 12% from a year earlier in September to 63,071 cars. Second-ranked Hyundai posted a 25% jump to 27,802 cars.

GM India reported a 71% surge in sales to 6,162 cars, while Tata Motors Ltd. (TTM) saw sales grow 19% to 15,802 vehicles.

BMW AG, Audi AG, Fiat SpA, Ford Motor Co. and Honda Motor Co. were among 13 out of 16 carmakers who reported higher India sales in September.

-By Nikhil Gulati and Santanu Choudhury, Dow Jones Newswires; +91-11-4356-3305; santanu.choudhury@dowjones.com