The European Automobile Manufacturers' Association figures showed that VW's sales fell 1.6% in March.European new car sales last month rose by 5.7% to 1.74 million registrations despite another dip in sales for Volkswagen.
Its data suggests that the German giant continues to suffer from the emissions scandal and recall of millions of cars.
In the first three months of the year, Europe-wide sales rose 8.1% on the same period in 2015, to 3.932 million.
Nearly every European country recorded growth last month, but sales fell 0.7% in Spain and dipped slightly in Germany, Europe's biggest car market.
Italy recorded the strongest rise of any major market with demand rising 17.4%, followed by France where sales rose 7.5%.
EU sales have now increased for 31 months in a row, hitting levels close to those recorded in 2007, shortly before the economic crisis began to hit the car industry.
Peter Schmidt, editor at Automotive Industry Data, told the Bloomberg news agency that it looks like the "European car market is recovering much faster than most analysts anticipated - including myself".
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