March has become the focal point for the new car market since the launch of the bi-annual plate change and accounts for about 17% of the total year-end figure.
Last month, new car sales topped a record of 466,955 units, latest figures produced by the Society of Motor Manufacturers and Traders (SMMT) show.
The Ford Focus remains the UK's best-selling model, claiming the top spot as best seller for both petrol and diesel.
SMMT chief executive Christopher Macgowan said: 'Although it is still early days, we could be looking forward to a fourth consecutive record year for the new car market. The growth in a record first quarter has surprised everyone, with March exceeding industry expectations of 450,000 units.
'If the market continues to be strong and the underlying economic outlook remains positive, we may well need to revise our 2.5 million unit forecast in the months to come.'
Diesel sales continue to rise, with volumes having risen for 42 successive months. Total diesel sales during the month of March reached 139,880, a 24.6% increase over the same month last year.
Macgowan said: 'Diesel penetration reached 30% in March and 30.3% over the first quarter. Diesel registrations are expected to account for 31% of the total annual market by the end of 2004, climbing to 3% in 2005.'
Alan Pulham, franchised dealer director for the Retail Motor Industry Federation, added: 'Every car manufacturer making gains is doing it on the back of diesel products. If this is a taste of things to come, 2004 could be a leap year in more ways than one. We will be looking at another record-breaking year for car sales in the UK.'
The popularity of superminis showed no signs of slowing in March, with four supermini models featuring in the top 10 best-sellers list.
Registrations increased by 7.6% and the sector took a 34.6% share of the March market. Commenting on general sales, Keith Parry, head of the Motor Retail group at Barclays Business Banking, said: 'March has overtaken September as the most popular month to purchase a new car.
Strong sales last month helped the new car market to a record first quarter. Sustained price competition has made new models more affordable than ever before. Britain's love affair with their cars shows no sign of abating.'
Among manufacturers announcing sales records were Hyundai and smart, while Honda is celebrating its best- ever quarter for fleet sales.
Honda's fleet sales are up by 38% compared with the same period in 2003 and fleet sales in March are up by 70%.
'We have enjoyed a tremendous start to the year and the great news is that this is just the beginning,' said Honda UK head of corporate sales James Daulton.
'The launch of the Accord diesel is the culmination of 24 months of new product introductions. All of these new cars give a great driver experience and yet still offer low CO2 emissions. This combination is helping us win new customers across the UK.'
Smart, about to launch its four-seater forfour model, achieved record sales in March for its fortwo, originally called city-coupe or cabrio, with 1,116 registrations. Its roadster also had its best month, with 491 registrations. And Hyundai's March sales topped 7,739 units, up 39% on the same month the previous year.
UK managing director David Walker said: 'The messages we are putting out about Hyundai are clearly being heard, that our cars represent outstanding value for money – and they are truly desirable cars that people are proud to own.'