The company had sold 46,130 units in the same month previous year, the company said in a statement.
Sales of passenger vehicles, including Scorpio, XUV500, Xylo, Bolero and Verito, were up 23 per cent at 25,327 units compared to 20,537 in the same month previous year.
However, its cars plus vans segment sales saw an 8% decline during the month.
Separately, the farm equipment business of M&M reported a 52% jump in domestic sales of tractors in September 2017.
MHCV sales of Mahindra soared to 884 units sold in September 2017 as compared to only 364 units sold in September 2016.
Sales in the medium and heavy commercial vehicles segment also rose 143 per cent from September 2016, becoming the best performing category for the company.
Total commercial vehicles sold in September stood at 17,803 units from 16,081 units sold in the same month previous year.
The new model is being rolled out of the company's Chakan plant, and has been designed and developed after the company gained an in-depth understanding of the needs of the road contractor fraternity. The firm has attributed the strong sales to buoyant festive season demand in both rural and urban markets.
M&M enjoys a leadership position in tractors and utility vehicles in India.
He further said, "We are particularly happy with the performance of our Scorpio brand, which had its highest monthly sales in September since inception". "Going forward, we are confident of sustaining a growth momentum for the rest of the festive season".