Toyota's Corolla was the best-selling car in Australia for the first three months of 2008 though General Motors' Holden Commodore beat it by just 20 units in March, Federal Chamber of Automotive Industries (FCAI) VFACTS data showed.

This was the first time a Toyota has been the overall first quarter market leader, Toyota Australia said. It sold 12,002 Corollas between 1 January and 31 March, ahead of the Commodore (11,551) and the Mazda 3 (8,779).

The automaker's sales and marketing chief David Buttner said Corolla sales in 2008 were up by almost 900 units, or 8%.

"Market conditions have been especially favourable for four-cylinder cars…," he added.

"Summer holidays in January and the Easter break in March have probably reduced fleet purchases of larger cars.

"We anticipate sales of those vehicles will accelerate in coming months, supported by the introduction of a [redesigned] Commodore wagon and a revamped [Ford] Falcon range.

"During the rest of the year, we expect Corolla sales to continue to average at least 4,000 a month."

The FCAI said first quarter new vehicle sales overall were up 3.3% compared with Q1 in the record year of 2007. But chief executive Andrew McKellar cautioned the market was yet to see any definitive effect on sales from recent interest rate rises.

Australian motor vehicle sales were continuing to run at record levels despite the rising rates, the FCAI noted.

First quarter sales were up 8,385 units to 263,453 though March sales were down 3.3% to 3,107 or 3.3%, although this was most likely due to the timing of the Easter holiday, which reduced the total number of selling days during the month by three.

"We are yet to see any definitive effect on sales from the recent interest rate rises, although there was some evidence in March of fewer private buyers in the market," said McKellar.

He said there was a strong shift away from traditional passenger cars towards sports utility vehicles (SUVs) during the first quarter of the year.

While the passenger motor vehicle market was down 4,127 sales, or 2.6%, year-to-date, SUV sales were up 16.1% to 7,544 units.

"Consumers are being lured by considerable new model activity in the SUV market, greater availability of diesel engines and a general preference for the versatility and flexibility that these vehicles offer," said McKellar.

The other major driver of the market so far this year has been light trucks, sales of which have grown by 3,952 or 9.5%, year-to-date.

"The light truck market was very strong in 2007 and continues to be buoyant in 2008 thanks to resilient demand from the business sector," added McKellar.

Toyota was the best selling brand at the end of the first quarter with 22.9% of the market, ahead of Holden (12.9%) and Ford (10.0%).

The Commodore was Australia's best-selling car in March with 3,988 sales, narrowly ahead of the Corolla (3,968).