More than half a million people registered a new car following the biannual number plate change on 1 March, the Society of Motor Manufacturers and Traders (SMMT) said.
At 518,707 cars, it is the most sales in a month since the current system for changing number plates was introduced in 1999.
Demand was up year-on-year across all fuel types, with diesel and petrol registrations growing by 4.8% and 4.7% respectively, while alternatively fuelled vehicles enjoyed a rise of 21.5%.
Registrations by private customers rose by 3.8%, with fleet demand increasing by 6% .
SMMT chief executive Mike Hawes said: "The sector's strong growth in March rounds off a robust first quarter as British consumers continue to demonstrate their appetite for new cars, especially ultra-low emission vehicles"
"This confidence should see registrations remain at a high but broadly stable level over the year, but could be undermined by political or economic uncertainty."
Year-on-year Volkswagen car sales halted a five-month slide after the diesel emissions scandal.
The brand had 38,694 registrations in March, up 0.02% on the same month in 2015.
But its year-to-date sales for 2016 remain 4.88% down on the same point last year.
Volkswagen Group admitted last September that 482,000 of its diesel vehicles in the US were fitted with defeat device software to switch engines to a cleaner mode when they were being tested for emissions.
The German-based manufacturer announced that 11 million vehicles were affected worldwide - including almost 1.2 million in the UK.