"The entry level car market has been hit the most with the rising interest rates, as the middle-class consumers are not keen to take up an additional commitment. In comparison, the A3 segment or sedans have fared better as the market has seen the entry of new variants recently", said Anindya Dhar, national car loans head of finance company Magma here.

Maruti Suzuki India recorded a 51.8 per cent rise in September sales of its A3 segment cars. Maruti, a market leader in the entry segment, saw its 800 model sales dip by 33.6 per cent in September at 3467 units.

The 800, priced at Rs1.98 lakh for the base model, shared the entry level platform with the Alto, another Maruti car.

The Alto was the largest selling small car in India now at 2 lakh cars per year. Maruti's A2 segment, comprising Wagon-R, Zen,Swift and  Alto saw a marginal dip of 1.3 per cent last month, while overall sales during the year so far was higher at 2,43,510 units compared to 2,33,102 units last year.

Competitor Hyundai Motors India recorded a 24 per cent rise in sales in the A2 segment on the back of i10.

In the used car market too, the M-800 lagged behind the Alto which was the highest selling car Maruti's True Value business.  Hyundai's Santro was the market leader in that used car market segment.

Maruti had so far denied phasing out the M-800 or even cutting down on production. On being asked if the delayed Nano launch and limited production from Pune and Pantnagar, could have a positive impact on 800 sales, a Maruti spokesperson said that it was unlikely. "The Nano has not had any adverse impact on 800 sales so far. It would stiffen competition in the used car market", he added.

Sources in Maruti indicated that the company would take a decision on the fate of the 800 after assessing the Nano's performance, impact and market conditions.

The sales of the 800 could slide if the Nano sold well and met booking demand and could then be phased out.

Maruti's recent launches indicated growing focus on the A2 and A3 segments.

Automobile finance companies admitted they had been hit by the drop in entry level sales. Magma, with a sizeable portion of its portfolio coming from entry level cars, indicated sales were likely to fall short of its projected growth targets this fiscal.

It had expected a 70 per cent year-on-year growth, but could end up missing this target.

The dip was only in comparison to projected sales, and the actual year-on-year figures are still healthy, clarified a Magma spokesperson.

Magma now aimed to focus on refinancing together with more A2 and A3 segment sales.  Interest rates for used cars were higher by around 200 basis points compared to new vehicle financing, currently at 14-16 per cent.