MUMBAI (Reuters) -- Sales by India's largest vehicle maker, Tata Motors plummeted in December as tight credit in a traditionally weak month and a slowing economy trimmed demand.

Overall vehicle sales dived an annual 47 percent to 25,219 units, while commercial vehicle dropped an even sharper 51 percent from a year ago. Passenger car sales fell 31 percent.

"A deepening recessionary trend in the economy, coupled with continuing credit squeeze and high interest rates, has further depressed customer sentiments. As a result, automobile purchases are being severely impacted," the company said in a statement.

On Thursday, the country's largest carmaker, Maruti Suzuki India, in which Japan's Suzuki Motor has a 54.2 percent stake, reported a 10 percent drop in sales.

"Automobile sales are usually modest in December because many consumers try and postpone their purchases to the new year when companies push sales trough heavy discounts and offers," brokerage Sharekhan said in a note on Friday.

All vehicles makers cut prices last month after the government cut excise duty by 4 percentage points but it failed to have any impact.

Top utility maker Mahindra & Mahindra saw sales fall 30 percent.

Bucking the trend, No. 2 car maker Hyundai Motor India Ltd (HMIL), the wholly-owned unit of Korea's Hyundai Motor saw its sales rise nearly 56 percent in December helped by exports, discount schemes and other incentives.

"We at HMIL have fared better as we have a strong line-up of products in the compact segment which has kept our sales steady," its sales and marketing head, Arvind Saxena, said in a statement, admitting the market was challenging.

India's top three two-wheeler makers showed a further decline in sales. Top bike maker Hero Honda Motors' Dec sales fell 10 percent, while No. 2 Bajaj Auto's dropped 29 percent from year ago.

"Just price cuts will not have any major impact. That has to be accompanied by finance, available at cheap rates," said Sharekhan's auto analyst Komal Iyer.

India's central bank cut its main short-term rates again on Friday, the fourth easing of rates since October, and some lending banks have partially passed on the cuts to those borrowing for new homes and cars.

Shares in Tata Motors, which fell nearly 78 percent last year, closed up 2.6 percent at 175.35 rupees on Friday on hopes that lower interest rates could boost customer sentiment.