The Federal Chamber of Automotive Industries says 79,666 new cars and trucks were sold last month, a rise of 11.1 per cent compared with the same month last year.
The result built on the 13.5 per cent increase in demand in December and the 12.4 per cent improvement in November.
It also entrenched the turnaround for the sector after sales fell 48.5 per cent in April and 35 per cent in May, as Australia endured the first wave of coronavirus cases.
FCAI chief executive Tony Weber said the January result was a positive sign for the industry.
“The January sales numbers are indicative of positive consumer confidence in the domestic economy,” he said.
“With attractive interest rates and a range of other economic indicators encouraging consumption, we hope to see this trend in new vehicle purchasing continue through 2021.”
Last month’s improvement came on the back of Australia’s increasing desire for sports utility and light commercial vehicles.
While passenger car sales actually fell by 9.3 per cent, demand for SUVs rose by 17.4 per cent and the light commercial market jumped by 24.6 per cent.
Toyota was the top-selling company in January with 16,819 vehicles, ahead of Mazda on 8508 and Hyundai on 5951.
Toyota also had the top-selling car, retailing 3913 vehicles across its HiLux range ahead of the Ford Ranger on 3120 and the Toyota Rav4 on 3066.
For the first time in more than 70 years, there were no recorded sales of Holden cars in Australia, following the closure of the brand by parent company General Motors.