Vehicle registration or retail sales rose in August on a sequential basis, industry data showed on Wednesday.
However, the data also showed that sales remained deep in the red on a year-on-year basis.
The Federation of Automobile Dealers Associations data showed that vehicle registration in August rose to 11,88,087 units from a retail off-take of 11,42,633 units reported for July.
Nevertheless, on a YoY basis, August retail sales declined by 26.81 per cent to 11,88,087 units from 16,23,218 units off-take during the like month of last year.
In July, the downslide rate in vehicle registration was 36.27 per cent on a YoY basis.
The 'green shoots' in sequential retail off-take were witnessed on the back of lower base and festive season.
Nonetheless, the trend also showed that India's auto sector continues to reel under the economic impact of the Covid-19 outbreak.
On a yearly comparison, two-wheeler sales de-grew by (-) 28.71 per cent, three-wheeler by (-) 69.51 per cent, commercial vehicles by (-) 57.39 per cent and passenger vehicles by (-) 7.12 per cent.
However, tractor registration continued its upwards journey with 27.80 per cent growth.
"With the start of 'Festival Season' and the government's continued effort to open up India, the month of August saw good numbers when compared to immediate previous months," said FADA President Vinkesh Gulati.
"August also saw an arrest in decline and pullback efforts on all fronts were visible, though on YoY, all categories, except tractors, continued to fall, though at a slower pace."
According to Gulati, entry level passenger vehicles were in high demand as personal mobility is being preferred with the current pandemic showing no signs of reduction.
"Apart from rural market which was showing revival signs until now, urban centres, for the first time, showed initial signs of demand pullback," he said.
"With the government's priority in spending towards rural development and agriculture, coupled with good monsoon and a healthy sowing season, tractors, small commercial vehicles and entry level passenger vehicles positively impacted August sales."