April 2 (Bloomberg) -- U.S. auto sales tumbled 37 percent in March, less than analysts estimated, as record incentive spending helped blunt the effect of job losses and low consumer confidence.

Enough buyers trickled back to showrooms to keep General Motors Corp., Toyota Motor Corp., Ford Motor Co., Chrysler LLC, Honda Motor Co. and Nissan Motor Co. from even bigger decreases after the annual sales rate plunged to a 27-year low in February.

The results spurred optimism that the industry’s 17-month slump in deliveries may be reaching a bottom while underscoring the weak demand that clouds the recovery plans for GM and Chrysler. President Barack Obama told them to “fundamentally restructure” or lose the federal loans keeping them alive.

“There are some indicators that things are improving,” Erich Merkle, an independent automotive analyst in Grand Rapids, Michigan, said yesterday. “All bets are off if we have some kind of a bankruptcy with GM and Chrysler.”

GM, the biggest U.S. automaker, is racing to meet a 60-day deadline Obama announced on March 30, while No. 3 Chrysler has 30 days to complete a tie-up with Italy’s Fiat SpA. Detroit- based GM and Chrysler have been propped up with $17.4 billion in U.S. aid over the past three months.

Annual Sales Rate

New autos sold at an annual rate of 9.86 million units, according to sales tracker Autodata Corp. of Woodcliff Lake, New Jersey. That beat the average estimate of 8.8 million of 8 analysts in a Bloomberg survey and was an improvement from February’s 9.1 million rate, the lowest since 1981. The rate averaged 16.8 million this decade through 2007.

“Historically, March is a much better month than February,” said David Lucas, an Autodata analyst. U.S. sales fell to 857,735 from 1.36 million a year earlier.

Incentive spending on each sale jumped 30 percent from a year earlier to $3,169 as carmarkers tried to entice consumers, research firm Edmunds.com said. That eclipsed the mark of $3,146 set in September 2004, when zero-percent financing was in vogue.

GM said U.S. sales slid 45 percent, compared with the 48 percent average estimate of 7 analysts in a Bloomberg survey, while Ford’s 41 percent decline was less than the 45 percent estimate and the 39 percent drop for Auburn Hills, Michigan- based Chrysler was narrower than the 46 percent in the survey.

Toyota, Honda, Nissan

U.S. deliveries for Toyota, the world’s largest automaker, declined 39 percent, less than the 41 percent of 4 analysts in a Bloomberg survey. Honda and Nissan, both based in Tokyo and both projected to fall 42 percent in that survey, dropped 36 percent and 38 percent.

Hyundai Motor Co. fell 4.8 percent, and Kia Motors Corp. slid 0.6 percent.

U.S. market share for the domestic automakers fell to 45.2 percent from 49.3 percent a year earlier, while the Asian brands led by Toyota City, Japan-based Toyota rose to 47.1 percent from 44.4 percent, according to Autodata. European brands, excluding Ford’s Volvo and GM’s Saab, climbed to 7.9 percent of new- vehicle sales from 6.4 percent.

April sales should be an improvement over March, GM marketing chief Mark LaNeve said on a conference call. Credit is becoming more available, and business at part-owned lender GMAC LLC is “getting back to normal,” LaNeve said.

Merkle, the independent analyst, said a rising stock market also probably helped buoy sales by reassuring consumers that the economy was recovering. The Standard & Poor’s 500 Index advanced 8.5 percent in March, and global equities rallied for the best month since 2003.

‘Sign of Hope’

“It’s one month in a row, and it’s of interest and there may be a small sign of hope,” Chrysler President Jim Press said on a call with reporters about the automaker’s results. “But if you look at the trends out there, there’s a lot of concern.”

Weighing on car shoppers were job losses that pushed U.S. unemployment rate to 8.5 percent, the highest since 1983, according to the median estimate of analysts in a Bloomberg News survey before the Labor Department’s April 3 report. Payroll cuts announced by employers almost tripled from a year earlier, placement firm Challenger, Gray & Christmas Inc. said yesterday.

Consumer confidence remained at almost a 42-year record low for the month, according to an index released March 31 by the New York-based Conference Board. The March reading was 26, up from 25.3 in February, the lowest since data began in 1967.

“Automakers are pulling every lever in their effort to attract buyers,” said Jesse Toprak, director of industry analysis for Santa Monica, California-based Edmunds. “The typical incentive programs simply do not resonate in today’s economy.”

March had 25 selling days, one fewer than in the same month of 2008. The analysts’ estimates are based on the daily sales rate, and some automakers report on that basis. Bloomberg uses unadjusted figures, which would be about 4 percentage points lower than the adjusted numbers.

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.netAlan Ohnsman in Los Angeles at aohnsman@bloomberg.net

Last Updated: April 2, 2009 00:01 EDT