The other top sellers were Volkswagen, Toyota and Nissan.
Marek Vihuri, director of sales at Kommest Auto, said that the Peugeot 206 is simply reliable.
"It does, what people expect it to do. It moves and it is visually enjoyable," he said.
The car's sticker price starts at 129,000 kroons ($8,100).
In terms of car sales in general, Peugeot was in first place with 173 new cars sold in March. Volkswagen is second with 102 cars and Toyota was third with 78. Nissan held fourth place with 66 cars.
In March 1,049 new passenger cars were sold, 106 cars more than a year ago.
According to the car dealers and service companies association AMTEL, 10,876 passenger cars were sold last year, 41 percent more than a year ago.
The French-made Peugeot led the market last year as well, if cars sold then exported are counted. The company sold a total of 1,684 passenger and utility vehicles.
In terms of passenger car sales alone, Peugeot ranked second after Volkswagen which sold 959 passenger cars, eight cars more than Peugeot. Toyota, the most popular car since the western borders were opened, ranked in third position with 927 cars.
Erkki Ots, director at Japaout , said that a lot of cars were sold last summer, although usually the purchases are made in autumn.
"People could not rest in summer because of the bad weather and they purchased the cars beforehand," said Ots.
Ots said that the most surprising winners were Honda and Mazda, while Fiat, which is one of the most popular cars in Europe, does not sell well in Estonia.
He said that Opel, Seat and Lada are also making a progress.
"Opel reduced its prices because its supplies were poor, while Seat and Lada came out with a number of new models," said Ots.
According to Ots a number of the cars sold in Estonia did not meet the new requirements enforced by the government since Jan. 1 and were therefore sold with large discounts until the end of March, when Euro 2 cars were banned in Estonia.
Due to the higher requirements many car salesman have discovered the opportunity to increase the prices of their Euro 3 cars.
Ots said thought it ridiculous that in Estonia, a country where the quality of fuel sold is so bad, that the cars sold have to be the best.
"It is a total anarchy," said Ots. "The car market has been put in order, we do not import Euro 2 cars and the cars produced for the American market. Why didn't the government improve the fuel market as well?"
Andrus Prants, the marketing manager at the Volkswagen dealership Saksa Auto, said his company's brand is successful because they have a wide variety of car models to offer.
"The sales of Golf, Bora and Passat are equally strong," said Prants.
Ots said that people like German cars and Volkswagen is a market leader in most European countries.
Prants expects a 10 percent increase in car sales this year.