Car sales in India rose 7.8% year on year in June, up for a fifth straight month and reinforcing the country as one of the few markets where demand has been growing.

New models and falling borrowing costs are luring new buyers back after a downturn in the middle of last year when high interest rates, lack of vehicle finance and a slowing economy squeezed demand, Reuters reported.

"It is a kind of pent-up demand," Dilip Chenoy, director general of the Society of Indian Automobile Manufacturers (SIAM), told the news agency. "A lot of sales in the two-wheeler and passenger car segment are led by new model sales."

Automakers sold 107,531 cars in June, compared with 99,741 a year earlier, SIAM data showed.

Maruti Suzuki, which last week reported a 22.6% annual rise in June car sales, led the pack.

However, sales of trucks and buses, a barometer of economic activity, fell 12.5% year on year to 36,193 units.