Car sales in India have risen 38% over the past year, figures from Society of Indian Automobile Manufacturers have shown.
Sales for July were 158,764, the trade body said.
Commercial vehicle sales were also up 37% compared with the same month last year, with 51,481 vehicles sold.
Analysts said relatively low vehicle sales this time last year, plus India's continued economic growth, have helped the car industry.
Orders for vehicles are expected to surge later this year - especially when India's festive season peaks in early November.
There are concerns this could lead to bottle necks as suppliers struggle to meet demand.
Higher interest rates and the availability of finance could hold also back growth in the sector, some analysts have warned.
Meanwhile, India's leading carmaker Maruti has said it will try to bring forward its plans to increase the amount of vehicles it can make.
It has been focusing on the domestic market, meaning its export growth has been restricted, said Angel Broking analyst Vaishali Jajoo.
"Some players are trying to put their thrust on the domestic market because demand is higher and there is no currency fluctuation impact."