Nov. 10 (Bloomberg) -- Indian passenger-car sales declined 6.6 percent last month, the most in more than three years, as the credit crunch made it harder for dealers to borrow funds to build up inventory.

Sales fell to 98,900 from 105,877, the Society of Indian Automobile Manufacturers said in New Delhi today. Vehicles sales, also including trucks, two-wheeled scooters and motorcycles, tumbled 14 percent, the biggest drop in almost eight years, according to data compiled by Bloomberg.

Car Sales have fallen in three of the past four months as dealers struggle to raise financing and consumers pare spending because of the economic slowdown and rising borrowing costs. Moves including an interest-rate cut and lower reserve requirements for banks have so far failed to boost lending to dealers, the automakers group said.

``It is not enough at this stage,'' Dilip Chenoy, the group's director general told reporters today. ``Everybody is reducing inventory in dealers' stock. They are under huge pressure.''

Some banks have stopped giving auto loans, he added. Banks have curbed lending worldwide because of concerns about getting their money back amid the economic slowdown. India's overnight call money rate rose to as high as 21 percent in October compared with an average 7.82 percent for this year.

Sales at Maruti Suzuki India Ltd., the nation's largest carmaker, fell 6.4 percent to 52,153 last month.

Automakers are curbing production because of slowing demand and concerns about India's growth. The nation's economy may grow 6.7 percent in the year ending March 31, slower than an earlier estimate of 7.5 percent, Goldman Sachs Group Inc. said today.

Production Cuts

Tata Motors Ltd., India's biggest truckmaker, will shut its factory at Lucknow in northern India from today till Nov. 15, spokesman Debasis Ray said by phone from Mumbai. The company will also halt commercial-vehicle production at its factory in Pune between Nov. 21 and Nov. 26. It also shut its Jamshedpur plant from Oct. 6 to Oct. 8, Ray said.

Ashok Leyland Ltd., the nation's second-biggest commercial- vehicle maker, last week said its plants will work on a three- day schedule for the next two months because of falling demand.

Tata Motors, which has declined 77 percent this year, rose 3.8 percent to 163.7 rupees at 12:01 p.m. in Mumbai. The benchmark Sensitive index of the Bombay Stock Exchange has fallen 45.7 percent this year.

Sales Forecast

The automakers group will review its sales forecast for the year ending March 31 after the November figures are announced next month, Chenoy said. The group has already cut its full-year growth forecast to between 8 percent and 10 percent from an earlier estimate of 12 percent to 13 percent, he said.

Automakers and suppliers may also slow some of the $17 billion of plant-construction plans announced in the country, Chenoy said.

Some companies may ``extend the time period of implementation,'' he said. Still, ``at this point, we have not heard of any new greenfield investments that has been stopped.''

To contact the reporter on this story: Subramaniam Sharma in New Delhi at ssharma@bloomberg.net.

Last Updated: November 10, 2008 04:23 EST