The Society of Indian Automobile Manufacturers (SIAM) said sales of cars to dealerships fell by 30.9% to 200,790 in July - the worst drop since December 2000.

The pace of the decline has accelerated in recent months as a liquidity crunch in India's shadow banking sector has dried up lines of credit to dealers and potential car buyers.

Vishnu Mathur, director general of SIAM, said the fall had wider implications for the Indian economy.

"If this industry goes down, then everything gets hurt. Manufacturing, jobs and revenue to the government," he said.

People at car dealership in India