There were 245,446 units registered to fleet and business last month, compared to 288,618 units during March 2017, equating to a market share of nearly 52%.
The market for alternatively fuelled vehicles has continued to grow apace, seeing a 9.8% rise compared to the same period past year - although still only making up a small proportion of the overall number of new cars on the market - 36,693 out of a total 718,489.
Sandy Burgess, the SMTA chief executive, said: "We have experienced a dramatic drop-off in registrations year-on-year of nearly 21 per cent..."
Sales were inflated in March a year ago, when customers brought forward purchases to beat a tax rise, meaning the sector had expected a drop as demand in Europe's second-biggest auto market cools.
Weakening consumer confidence in the wake of the 2016 Brexit vote has also been blamed by the industry body and some dealership bosses for faltering registrations in Britain over the last 12 months after record highs in 2015 and 2016. Registrations of petrol cars were essentially stable, up 0.5%.
New auto sales had fallen for the first time in six years last year with a 5.7 per cent decrease to about 2.5m vehicles.
Looking ahead, the SMMT expects that registrations will continue to fall this year, with the latest forecasts predicting the fall will be between 5% and 7% by the end of 2018.
The number of new diesel cars registered for sale in the United Kingdom has continued to decline, figures published by the motor industry today (5 April) have suggested.
It marks a year in decline for the country's new auto sales, as a variety of factors including Brexit uncertainty, changes to vehicle tax rates and the so-called "demonisation of diesel" cause buyers to hold off on upgrading their vehicle. This means creating the right economic conditions for all types of consumers to have the confidence to buy new vehicles.
"All technologies, regardless of fuel type, have a role to play in helping improve air quality whilst meeting our climate change targets, so government must do more to encourage consumers to buy new vehicles", he added.
"March is always a very busy month and so to take a 15% hit when there are hundreds being retailed, that's pretty bad news in itself". These factors are heavily influencing vehicle choice and a lack of understanding can result in the wrong decision.