An increase in tax on diesel cars in Britain and continuing anti-diesel sentiment has led to a huge drop in sales during the busiest month of the year for new car sales.

Demand for new diesel cars in Britain fell by more than a third in March, pushing down total registrations by 15.7 percent, in a further blow to the segment which faces levies and bans worldwide. 

New tax changes push new diesel cars registered after this week up a tax band and see diesel-powered company car drivers faced with a benefit-in-kind tax increase from 3% to 4%.

Reuters reports that vehicles that conform to the Euro 6d standard of air quality are exempt from the new diesel VED supplement, but according to the government-backed Low Carbon Vehicle Partnership, "there are currently no new diesel cars on sale that meet this stricter standard".

All new diesel-powered cars will have to comply with Euro 6d from 2020; the cleanest new diesel cars on sale currently conform to Euro 6c, Europe's present required level.

The VED increases and company car rate changes don't apply to diesel vehicles currently on the road. Those cars will remain in their current tax bands.

Sales were inflated in March last year, when customers brought forward purchases to beat a tax rise, meaning the sector had expected a drop as demand in Europe’s second-biggest car market cools.

There has been a 0.5 per cent increase in the number of petrol cars sold in the UK.

This March, registrations fell to 474,069 vehicles, data from the Society of Motor Manufacturers and Traders (SMMT) showed, although demand for petrol models rose 0.5 percent.

Sales of diesel cars have slumped in many European countries as regulators and politicians crack down on the segment with plans for bans, levies and additional taxes in many cities.

SMMT Chief Executive, Mike Hawes, defended the need for new, clean diesel models as vehicle excise duty rises this month for most new diesel car buyers.

"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 rather than hang onto their older, more polluting vehicles," he told Reuters.

March is generally the top-selling month of the year as it is one of only two months when new licence plates are issued.

Since the 2015 Volkswagen emissions cheating scandal, a number of major cities including Madrid, Paris and Athens have announced plans focused on cutting diesel emissions.

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.

Just over 60 percent of recent or prospective car buyers have had their decision-making influenced by Britain’s exit from the European Union, including some delaying a purchase, a survey by Auto Trader released last month showed.

Vehicles that conform to the Euro 6d standard of air quality are exempt from the new diesel VED supplement, but according to the government-backed Low Carbon Vehicle Partnership, "there are currently no new diesel cars on sale that meet this stricter standard".

All new diesel-powered cars will have to comply with Euro 6d from 2020; the cleanest new diesel cars on sale currently conform to Euro 6c, Europe's present required level.

The tax increases and company car rate changes don't apply to diesel vehicles currently on the road. Those cars will remain in their current tax bands.