LONDON -- UK new-car registrations rose 5.3 percent last month to a 518,707. It was the best March result ever in the UK and the top sales total since August 1997, the Society of Motor Manufacturers and Traders said.
Cheap credit and attractive finance deals have fueled demand in Europe's second-largest car market.
"Business users continue to replenish fleets as more economical vehicles become available and consumers continue to access the very cheap finance deals that show no signs of abating,” Phil Harrold, PwC's chief automotive analyst, said.
Sales in the month are traditionally strong as new registration plates are issued every six months, in March and September, but last month was the highest March on record, the SMMT said on Wednesday.
Despite this, some observers cautioned that political turbulence expected in the UK later this year could affect the market.
“We anticipate that the market will start to cool from April as the weaker pound caused by the impending EU referendum starts to feed into increased transaction prices,” John Leech, head of automotive at KPMG, said following the release of sales results.
Flat sales at VW
Demand for Volkswagen-brand vehicles rose 0.02 percent last month, the first increase since September, after which demand fell due to parent VW Group's admission that the automaker cheated on diesel-emissions tests.
UK sales at most other VW Group brands were positive last month. Audi was up 4.6 percent, Skoda's volume rose 10 percent while Porsche’s sales jumped 19 percent. Seat was the exception with a 1.9 percent decline.
• Download Excel file, above right, for UK sales by brand for March and 3 months.
The UK's first-quarter sales were up 5.1 percent to 771,780.
Reuters contributed to this report