Vehicle sales in China climbed 55.6% from a year earlier to 1.74m units in March, according to the the China Association of Automobile Manufacturers (CAAM).

‘Against the backdrop of a continued improvement in the general economy and an active car market, March’s automobile production and sales reached a peak this year,” a CAAM statement said.

”The current month and first quarter production and sales figures set a new historical record.”

Passenger car sales rose 63.2% to more than 1.26m units in March, bringing the quarterly sales figure to more than 3.52m units, up 76.3% on last year.

The March sales figure means first quarter sales reached 4.61m units, up 71.8% on last year.

The Chinese government cut the sales tax on small cars to 5% from 10% last year in a bid to boost domestic consumption amid the economic slowdown. The policy is being partially retained in 2010, with the sales tax now at 7.5 percent.

However, China’s strong economic boom of recent years continues to lift incomes and bring more of the population within financial reach of car ownership.

The CAAM also said China produced more than 1.73m vehicles in March, up 57.7% year on year, taking first quarter output to 4.55m units, up 77% on last year.