Jan. 15 (Bloomberg) -- Mitt Romney won Michigan's Republican presidential primary, besting Senator John McCain and gaining a victory that gives his campaign new life.

Campaigning on promises to address Michigan's economic woes and help revitalize the auto industry, Romney said his victory was one of optimism over ``Washington-style pessimism.''

``Only a week ago, a win looked like it was impossible,'' Romney said at his celebration in Southfield, Michigan. ``But then you got out and told America what they needed to hear.''

McCain and third-place finisher Mike Huckabee had already moved on to South Carolina, which holds a Republican primary on Jan. 19, to make their concessions.

Romney, the former governor of Massachusetts, was counting on Michigan to regain momentum after losses earlier this month to Huckabee in Iowa and McCain in New Hampshire. With each of the three leading contenders having a victory under his belt, the Republican nomination race is a free-for-all going into South Carolina and the caucuses in Nevada on the same day.

``We're ready for the challenge ahead, my friends,'' McCain told supporters in South Carolina. ``Tomorrow we get up and fight.''

Huckabee, the former governor of Arkansas, congratulated Romney and predicted his background as a Southerner and as a social conservative would hold sway in South Carolina's primary. ``The first-in-the-South primary is going to give their support to the first-in-the-South candidate who understands this nation needs leadership,'' he said.

Party Rules

The Democratic race in Michigan wasn't contested because the state violated national party rules by moving up the date of the primary.

With 83 percent of the ballots counted, Romney had 39 percent of the vote to 30 percent for McCain and 16 percent for Huckabee, according to an Associated Press tally. Texas Representative Ron Paul was next with 6 percent, followed by former Tennessee Senator Fred Thompson with 4 percent and former New York Mayor Rudy Giuliani with 3 percent.

Romney, 60, whose father, George Romney, was Michigan's governor from 1963 to 1969 and chairman of American Motors Corp., appealed to Michigan voters in part vowing to address the economic anxiety in the state.

Automakers

Michigan has been hit hard by the declining fortunes of General Motors Corp., Ford Motor Co. and Chrysler LLC. The state's unemployment rate is 7.4 percent, compared with the national rate of 5 percent, and it's been among the states hardest hit by the housing slump. Exit-poll data published by CNN showed the state of the economy was the most pressing issue among Michigan voters.

``I will never accept defeat for any industry here in America,'' Romney said. During the campaign, he chided McCain for saying some of the jobs lost in Michigan will never come back and that workers need to be retrained.

Romney poured resources into Michigan to make his stand. He spent more than $2 million on television advertising in the state, almost three times as much as McCain and four times as much as Huckabee, according to figures compiled by the Michigan Campaign Finance Network, a nonpartisan group that monitors political spending and donations in the state.

Romney's win is a setback for McCain, 71, who had counted on a strong turnout by independents and cross-over Democrats to solidify his front-runner status coming off his Jan. 8 win in New Hampshire. The Arizona senator won the Michigan primary during his unsuccessful 2000 bid for the Republican nomination.

McCain

The independents didn't rally behind McCain as they did in 2000. They made up 25 percent of the Republican primary electorate, less than eight years ago, according CNN's exit-poll data. While McCain won 35 percent of independents to Romney's 29 percent, self-identified Republicans voted for Romney over McCain 40 percent to 29 percent.

Romney also beat Huckabee among voters who considered themselves evangelical or born-again Christians, 34 percent to 29 percent, according to the exit polls.

As much as Romney was looking to Michigan to revive his campaign, Thompson was staking his candidacy to a good showing in South Carolina.

``It's very important that I do very well here, there's no question about it,'' Thompson said this morning in an interview on the Fox News Channel. ``And we have the real prospects of doing so.''

South Carolina Polls

The most recent polls in South Carolina showed McCain leading by as much as 9 percentage points with Thompson, Huckabee and Romney vying for second.

South Carolina Senator Lindsey Graham, a McCain ally, said support from military veterans and religious conservatives will keep McCain on top.

``We're going to do well with every demographic, because the issues bring us together,'' Graham said. ``John is going to win South Carolina.''

As Republicans were laying the groundwork for South Carolina, Democratic candidates Senator Hillary Clinton of New York, Senator Barack Obama of Illinois and former Senator John Edwards of North Carolina were in Las Vegas for a debate. Nevada holds party caucuses Jan. 19.

To contact the reporters on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net; Julianna Goldman in Washington at jgoldman6@bloomberg.net

Last Updated: January 15, 2008 23:31 EST