But some vehicle types fared better than others as sales of hybrid and plug-in hybrid vehicles continued to charge ahead, while diesel and petrol vehicles slowed in popularity.
Electric vehicles also claimed a minor victory during March, with a larger share of new car sales than in February, though their numbers remained lower than 2024.
The figures come amid heated debate in the industry over potential changes to the federal government's New Vehicle Efficiency Standard that could see penalties for car companies removed for exceeding emission targets.
Modest sales of electric vehicles during the month proved the standard should be reassessed, Federal Chamber of Automotive Industries chief executive Tony Weber said, as it proved motorists were not embracing low-emission cars quickly enough.
"We are at a critical point in transition to a lower emission vehicle fleet but the reality is clear: Australian families and businesses are not shifting in large numbers to EVs," he said.
"The early adopters have acted but the rest of the vehicle-buying public has not followed."
Electric vehicles made up 7.5 per cent of all new vehicle sales during March, figures showed, up from 5.9 per cent in February.
But consumers purchased 2079 fewer electric vehicles this March than they did the year before, and sales of Tesla vehicles fell by more than 20 per cent during the month.
The uptake should make the government reconsider its transport emission targets, Mr Weber said, and whether consumer demand could support them.
"Questions must be asked about the government's modelling and, in particular, their assumptions about consumer acceptance of low-emissions technologies," he said.
His comments came one day after reports the coalition would launch an election policy to remove financial penalties from the New Vehicle Efficiency Standard, which were due to come into effect in July.
The changes have yet to be confirmed by the party.
Australian motorists did embrace some low-emission vehicles during March, however, with figures showing hybrid car sales represented more than 16,800 purchases and plug-in hybrid cars jumped to almost 7000 sales – a rise of 380 per cent on 2024.
The significant increase came in the month before a tax concession on their purchase was removed.
The growth in hybrid car sales affected the popularity of petrol and diesel vehicles, the numbers revealed, which fell by 8.3 per cent and 1.2 per cent respectively.
Toyota remained the top-selling vehicle brand for the month of March, figures showed, but the Ford Ranger ute claimed the title of Australia's best-selling vehicle, followed by its RAV4 SUV and Hi-Lux ute.
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