* Edmunds, dealers say Toyota US sales surged in March
* Industry-wide sales seen near 12.5 mln sales rate
* Toyota dealer chief sees biggest boost post 'clunkers'
DETROIT, March 11 (Reuters) - Sales incentives, including zero-percent financing offers, have boosted Toyota Motor Corp's (7203.T) U.S. sales by nearly 50 percent in early March, an industry tracking service and dealers said on Thursday.
Edmunds, which analyzes U.S. auto sales trends, said Toyota sales were up 47 percent from a year earlier in the first eight days of March.
Edmunds estimated that Toyota's U.S. retail market share in early March had jumped to 16.8 percent, up sharply from 12.8 percent a month earlier, when safety recall problems had sent sales tumbling.
Industrywide U.S. auto sales are tracking to hit a rate of 12.5 million vehicles in March because of the steep discounts on Toyota vehicles and a competitive campaign launched by General Motors Co [GM.UL].
GM is offering car shoppers rebates of up to $3,000 on vehicles including the Malibu mid-size sedan, or zero-percent financing.
Toyota, which has traditionally spurned such discount programs in order to protect resale values, has offered up to $3,000 in rebates and dealer incentives on a range of vehicles, including its top-selling Camry, or cut-rate financing.
Both manufacturers are offering steeper discounts on their competing full-size pickup trucks, GM's Chevy Silverado and GMC Sierra and the Toyota Tundra.
Edmunds said GM's sales incentives lifted Chevy's retail market share to 12.9 percent, up from 11.4 percent a month earlier.
Several major Toyota dealers said their own sales were running slightly higher than the Edmunds estimate through Tuesday. That would mark a sharp reversal from sales declines in January and February tied to the automaker's recall crisis.
Paul Atkinson, president of the Toyota national dealer's council and a Toyota dealer in Texas, said he expected that the March sales boost from incentives would mirror what the automaker saw during the 2009 "cash for clunkers" program.
Toyota was the big winner from that U.S. government-funded scrappage program, which offered tax credits of up to $4,500 to swap out of older and less fuel-efficient vehicles.
Toyota had a 19.4 percent share of vehicles sold under the "clunkers" program that ran from late July through the third week of August 2009. Toyota's share was the highest in the industry.
"I truly believe that March could rival cash for clunkers," Atkinson said.
Sales at his own dealership were running at three times the level of January and February in early March, he said. Customers shopping for the bargains do not appear concerned by Toyota's recalls, he said.
"Honestly, I think the public has had enough," he said.
Toyota has recalled 8 vehicles globally to address the risk that accelerator pedals on a range of its vehicles could become stuck because of a loose floor mat or a glitch in the pedal assembly.
Unintended acceleration in the company's Toyota and Lexus vehicles has been linked to at least five U.S. crash deaths since 2007. Authorities are investigating 47 other Toyota crash deaths over the past decade.
Just this week, as Toyota sought to shift attention away from the safety problems, at least three U.S. drivers reported new cases of driving vehicles that appeared to surge out of control.
Atkinson has encouraged Toyota dealers to protest GM's incentives in March, saying they amounted to a taxpayer-funded program of discounts because the U.S. government funded GM's restructuring in bankruptcy with $50 billion in aid.
"We just want a level playing field," he told Reuters. "These GM incentives are kind of like using tax dollars to encourage my fellow citizens to not do business with me."
GM has defended its use of incentives, saying such discounts are a well-established part of the way cars are sold in the U.S. market. (Editing by Gerald E. McCormick)