M&M had sold 51,904 units in the same month last year, the company said in a statement.
In March, M&M's domestic sales stood at 48,490 units as against 49,225 in the same month previous year, down 1.49 per cent.
Total sales of passenger vehicles, including Scorpio, XUV500, Xylo, Bolero and Verito, stood at 23,433 units during the month as against 25,847 in March 2013, down 9.33 per cent.
Sales of the company's four-wheel commercial vehicles were up 2.53 per cent at 17,649 units as against 17,212 units in March 2013, it said.
M&M's exports were up at 17.43 per cent to 3,146 units during the month from 2,679 units in March 2013.
M&M Chief Executive (Automotive Division) Pravin Shah said: "Post the reduction in the excise duty across all segments, the auto industry has seen the level of inquiry going up, but has not witnessed any major surge in sales."
He said the company hopes that the buying sentiment will improve and change post the national elections, leading to an increase in demand.
"At Mahindra, we are happy with our overall performance for the month of March where the de-growth is negligible at 0.5 per cent. Going forward, we continue to be optimistic for the future and expect to witness a growth momentum during FY 2014-15," Shah added.
For the entire fiscal 2013-14, the company's sales were at 5,07,176 as against 5,63,373 units in the previous fiscal, down 9.97 per cent.