The company had sold 37,915 units during the same month in 2015, M&M said in a statement.
In the domestic market, sales were down 1.5 per cent to 34,310 units last month as compared to 34,839 in the year-ago period, it added.
Exports during the month declined by 33 per cent to 2,053 units as against 3,076 units in December 2015, the company said.
Sales of its passenger vehicles, including Scorpio, XUV500, Xylo, Bolero and Verito, were down 8 per cent to 16,698 units as compared to 18,197 units in the same month last year.
Commercial vehicle sales were up 14 per cent to 14,154 units in December as against 12,465 units in the year-ago period, M&M said.
M&M Chief Executive (auto division) Pravin Shah said: "The auto industry continues to go through challenging times, grappling with the short-term effects of demonetisation as well as reduced and postponed purchase decisions. However, we believe there will be a gradual pick-up in demand starting next few months."
The company hopes that the implementation of the Goods and Services Tax (GST) along with some initiatives taken by the government in the upcoming Union Budget, which is likely to be presented on February 1, will provide a veritable boost to the auto industry and the economy in general, he added.
"I believe, this, coupled with stable fuel prices and reduced inflation and interest rates, will fuel the automotive industry's growth going forward," Shah said.