Car sales in India hit a new record in January, rising by 26% to 184,332 units according to data released by the Society of Indian Automobile Manufacturers (SIAM).

Although market growth is widely expected to slow in 2011, analysts say that demand in India is continuing to benefit from improved access to consumer finance and rising real incomes.

However, after two years of strong growth, a slowdown is expected in 2011 amid rising interest rates, fuel prices and some increase in car prices due to the higher costs of raw materials.

Steel prices for automakers in India moved up by around 10% in 2010; rubber prices were also up substantially. The appreciating yen has also been a concern for Maruti Suzuki because it imports some components from Japan.

JD Power forecasts that light vehicle sales in India will reach just under 3m units in 2011, which would represent annual growth of around 10%. The market grew by 30% in 2010.

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