UPDATE 2-Italy March new car sales fall 18.76 pct

(Recasts lead with official figures, adds details)

By Gilles Castonguay

MILAN, April 1 (Reuters) - Italy's new car sales fell for a third straight month in March, down 18.76 percent, leading the car industry to blame weaker consumer confidence in light of an election campaign and expectations of slower economic growth.

Sales of Fiat SpA's (FIA.MI: Quote, Profile, Research) three brands suffered an even harder fall of 20.6 percent.

For the first quarter as a whole the total number of sales registered with the transport ministry was down 10.01 percent at 663,532, according to official figures released on Tuesday.

"(There is) a weaker trend in demand ... despite the existence of eco-incentives from the state," said a statement from auto industry association ANFIA, referring to tax breaks introduced by the government to encourage drivers to buy less polluting cars.

The fall was 10.6 percent when taking into account the two extra working days in March 2007, ANFIA said.

The drop in March, the biggest this year, had been expected.

Promotor, a centre that monitors trends in the industry, forecast earlier in the day a sharp downturn, while Fiat's chief executive described the month as "pretty sad" at the company's annual shareholders meeting on Monday.