March in Iceland

Quick facts about the weather and daylight in March

Average temperature: 0.88°C /  33.58°F
Average hours of sunlight: 109,31
Average of lowest and highest recorded temperature in March: Low -9,49°C / 14.92°F –  High 8,58°C / 47.44°F
Length of day on March 1st: 10 hours and 11 minutes

I think I’ll have to start this discussion about March in Iceland with some real talk: March is not the most fun month of the year weather wise. It’s still winter but you can feel spring is just around the corner but then you get all disappointed when it doesn’t actually arrive. The weather starts to calm down toward the end of the month but what comes after winter is this weird in between time which is neither nor. Not winter but not spring either. Sprinter? Or Wring, maybe?

March is also the second wettest month in Iceland with just over 80 mm of precipitation on average.

One thing you will notice is that the days are getting brighter again and because of that March is the last good month to see the northern lights. You can still see them in April, and there are still tours running until the 15th of April, but November to March is the official northern lights season and will give you the best probability of sightings.

So March is a bit of an in-between month.

Sometimes Easter will happen in March, as you probably know, and if you are traveling to Iceland during the Easter week you have to take that into consideration. Iceland has an official state religion, over 70% of the people in Iceland belong to the Lutheran state church, so all the Christian holidays are public holidays. We also have some (somewhat backward) laws where certain things cannot be open during those days and therefore a lot of things close down. Most of the tours run as normal though and more and more restaurants and bars have started to stay open during the whole Easter week.  If you do happen to come to Iceland during the Easter week and you want to do something super nice and special then check out Aldrei fór ég suður music festival in Ísafjörður.

The end of March til about middle of April, save the Easter week, is probably the last of what we once called the off-season when we had fewer tourists around and the hotels and guesthouses sank their prices to lure the few that were about. It’s not like that anymore but definitely slower than the other months so good deals can be found.

Just remember that even though spring has arrived where you live it’s still winter in Iceland!

Annual events and festivals in March worth checking out.

Food and Fun: A food festival where world-renowned chefs take over Reykjavík restaurants and compete who can come up with the best food using only Icelandic ingredients.

Reykjavík Folk Festival: A small and intimate music festival focusing on the local folk music scene.

Design March: Design festival showcasing and featuring all fields of Icelandic design.

Reykjavík Blues Festival: Young local artists and legends from both side of the Atlantic jam together for your enjoyment.

Tours you might want to consider in March

Ice cave tours: March is the last month for ice cave tours but most of them stop running around the 15th of March.

Most tours run like usual during the winter months so you just have to choose the ones you like the most. With more daylight, tours that combine more than one activity like the Golden Circle and snowmobiling or Golden Circle and Snorkeling are worth checking out.

This post is part of a series about the best time to visit Iceland where we go through things to consider before visiting Iceland for each month of the year. All the weather related statistics come from the Icelandic Met Office but the rest is based on our feelings and experience. 

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88 thoughts on “March in Iceland”

  1. Audrey Knox says:

    Hi Audur,
    Where is that swimming pool you are showing for the March in Iceland photo ? The next time I visit, I want to go there !

    Your Canadian reader, Audrey ????

    1. mm Auður says:

      It’s Seljavallalaug

  2. Shi Qi says:

    Hi Audur,

    Is there any ice cave tours that you will recommend for late March?

    1. mm Auður says:

      No, most of them stop running by middle of March.

  3. Brooke says:

    Hi Audur!

    I’ll be in Iceland from March 13-March 19 in 2017. Any advice on places to check out or other events that aren’t annual that will be happening?

    Thanks!
    Brooke

    1. mm Auður says:

      It’s too early to tell about events happening in March that are not annual. As for places to see, I recommend you read through the blog to get some ideas.

    2. John M says:

      So are we Brooke! Our Second trip to Iceland!

    3. Monica says:

      We will be too!

    4. Jonathan says:

      Hey Brooke, I am visiting on them months too. Do you have any tips or hints of what to see and do at that time?

  4. John says:

    In November of 2015 l went Iceland and Alaska. When in Iceland l immediately fell in love with this tiny but unspoiled country. However, when speaking with one of the tour guides he informed me that Icelands main resource is now tourism, and along with that came the fear that they would lose their freedom and whatever else. I asked him why he said that, and he explained that Icelanders see North America as being corrupt, and they are afraid that we will ruin their peaceful way of living. When l thought about it, l realized that what he said was true. I am from Canada and l can only hope that people from Canada and the U.S don’t spoil this beautiful country that has been so peaceful with one of the lowest crime rates in the world.

    1. mm Auður says:

      Tourists are not “spoiling” Iceland. The growth has been very steep over the last few years and we definitely need to spend some money on infrastructure to make up for it but this person’s view are not every Icelander’s.

    2. Joel Kann says:

      I heard the same arguements in Hanoi, but mostly from Euro expats, who were upset about rising prices and the appearance of tipping since North American tourists started to arrive. Americans cannot get out of the habit of tipping. The Vietnamese seemed to like the influx of trade.

  5. jAn says:

    I can’ t wait for your next (monthly) postings. We are coming in June/july/august for a roundtrip with our own (dutch) car.
    jAn.
    p.s
    I love the way u write things; sometimes makes me laugh.

    1. mm Auður says:

      We got slammed with work so I haven’t gotten round to this yet but it’s at the top of my todo list

  6. Ginny says:

    Love your blog! We are headed March 31-April 5 so I can’t wait to read April’s post! Thanks for such a great resource!

    1. mm Auður says:

      You’re very welcome. I’m hoping to get to the rest of the months soon.

  7. Trevor Pell says:

    Some good comments about Iceland. I am visiting in March as a present for the wife and am looking forward to a lovely 3 nights in Reykjavic.

  8. Jennifer says:

    I was just referred to your blog by a friend who visited Iceland over summer, we have plans to visit this coming March of 2017 – the 10th-15th. Did we hit Easter week? Also, we’re bringing our daughters, 7 and 2 with us. Do you have any kid recommendation posts?
    THANKS!

  9. Brooke says:

    I am looking into traveling to Iceland in the beginning of April, the week before Easter. I noticed information about things closing down for Easter week, cave tours being closed for the season,etc. would you not recommend April? We are looking to focus our stops at waterfalls and other landscapes. Was hoping to do a ice cave tour, horseback riding, and hiking.
    Thanks for any information you can provide to help us make a decision of when to go.

    1. mm Auður says:

      Here you can read the same type of post for April: https://www.iheartreykjavik.net/2017/01/april-in-iceland/

  10. Pablo says:

    Do you think that the rain is an important drawback to visit Iceland on March?

    1. mm Auður says:

      No, it can rain any time of the year. I think the biggest problem people have with both March and April is that they are used to it being spring at home but it’s not really spring in Iceland. So it’s colder than they imagine.

      1. Pablo says:

        Thanks for the answer, my worries about the rain are because I have never driven with snow and maybe it could be dangerous, do you think I should worry that much about that?

  11. Tia says:

    A couple of friends and I are traveling to Iceland in march. Would you recommend us hiring a tour guide or can we explore the waterfalls by ourself ? And which waterfall is great to check out during march ?

    1. mm Auður says:

      Depends on your budget – it can be quite costly to hire a guide – probably cheaper to find a good tour with a guide than to hire on yourself.

      1. Tia says:

        We are planning to rent 2 4×4, which company would you recommend that has options for big 7 or more seaters. Would you recommend doing the golden circle on our own when we are out there ? As in would us driving around in march to check these places out be ok

  12. Liz says:

    Hi Audur,
    Our children gave my husband and I flights to Iceland for Christmas. We are very excited and hope Mother Nature will provide us with a magical Aurora Borealis show. We are considering renting a camper vehicle to travel around Ring Road. If we are in Iceland from March 3-11, do you think a camper will keep us warm enough and be safe enough on the road?

    1. mm Auður says:

      I cannot in good conscience recommend a camper van in winter in Iceland. It’s just not a great idea.

  13. Khanhi Thai says:

    Hi Audur,
    I was just reading about the Ice Cave blog and the contact button to get more information on the self-drive options is not working. I was wondering if you could tell me a little bit more about the self-driving options and places to visit around iceland 🙂

    Thank You!

    1. mm Auður says:

      Hi Khanhi – I have to admit that I don’t quite understand what you mean with the contact button on the self drive options?

      I recommend you check out these posts: https://www.iheartreykjavik.net/tag/drive-it-yourself/

  14. Michael Jagacki says:

    Hello All from USA. I took my family to Iceland last May. We drove the entire route 1 around the county never staying in the same place on any night. Reykjavic to Hofn thru east fjords to Myvat to Akureyri and back to Reykjavic! Our favorite part was traveling along southern coast out east to Hofn – beautiful waterfall and glacier lagoon along the way. We ran out of time and did not see the West Fjords. My wife and I are returning March 6-11 to do just that. I hope the weather and road conditions allow us to visit all the little villages – and especially Dynjandi falls. Fingers crossed! Happy to share details and suggestions if anyone interested.

    1. mm Auður says:

      It looks like you can go to Dynjandi right now – this winter has been quite mild so far, but often in winter you can’t go there. Keep in mind that Dynjandisheiði (the road between Dynjandi and Patreksfjörður) is usually closed in winter so you can drive it as a circle like you can do in summer.

      1. Michael Jagacki says:

        Thanks Audur. My plan is do drive to Borgarnes from Reykjavic and proceed around the Snaefellsnes penninsula the day before, possibly spending the night in Reykholar. Then stick to the coast as I head west and north around the Fjord to Isafjordur for the second evening. Then head down the Strand in region to Holmavik and Laugerbakki for night three. I realize I may have to modify that itinerary based on road conditions at the time but am hoping for a miracle! What do you think? Warm regards.

        1. Michael Jagacki says:

          Sorry for the auto-correct. I meant Strandir region, not “Strand in region” 🙂

  15. Rima says:

    Thats heartbreaking 🙁 I will be in Iceland from 10th March to 22nd March. Thought this was a great period for northern lights but did not realise it s not a great time for seeing the country. I am travelling from India and its a super expensive trip. Wish there would be some sunlight for photography.

    1. mm Auður says:

      No need to be discouraged – this is a good period for the northern lights (although it depends on many things of course). There is daylight also, just not as much as you are probably used to. Doesn’t mean it’s dark all the time, it just gets dusky.

      I don’t how you read from this post that there was a reason to be heartbroken – even the worst month to visit Iceland is still a good time to visit Iceland. It’s beautiful in any season.

      1. Rima says:

        Do you think 11 day ring road trip is possible. I am travelling solo and never driven on a ice or snow. What scares me is the drive from Hofn onwards upto north. Its a lonely and long patch.

        1. Jean says:

          I totally overestimated how long I could drive in a day when I was in Iceland in December. My bf and i drove from the airport to Kirkjubaeklauster (around 350km?) after visiting the blue lagoon. it was not enjoyable, especially when it rained the whole day and we had trouble with road hynotia (driving in a single lane and relatively straight road). we had to switch a few times and pulled over onto one of the ‘photo spots’ to take a quick nap all together. So if you’re driving by yourself, be more conservative in how far/long you can/want to drive in a day 🙂

  16. Molly Rose says:

    Hi there, I’m traveling to Iceland with my boyfriend March 7-11 before we head out to Holland. We have very little time in the country and plan on renting a car. What are the MUST SEES and great places to stay that are withing 5 hours or less driving distance from Reykjavik? I have been doing research and it seems like there’s so much to see and therefore I’m having a hard time prioritizing what I want to do in our short stay! We are staying at the Kex Hostel the night of March 7th and then would like to venture out to a new region to stay the rest of the days. Any pointers are greatly appreciated! Thank you!

    1. mm Auður says:

      Well, first of all, there’s a lot of info on this blog so I suggest you start there: https://www.iheartreykjavik.net/the-blog/

      You might enjoy these posts in particular:
      https://www.iheartreykjavik.net/2013/03/reykjavik-basics-comfortable-day-tours-from-reykjavik/
      https://www.iheartreykjavik.net/tag/drive-it-yourself/

  17. Karan says:

    Hi Auður

    We are visiting Iceland between March 9-15. We were wondering what is the best time of the day to visit the blue lagoon ? Also is it safe to drive down from Reykjavik ? Do give us your thoughts 🙂

    1. mm Auður says:

      Early morning and later in the afternoon are apparently less busy but in March that’s also when it’s still quite dark. I think it doesn’t need to be bright to visit but you might disagree.

      If there’s nothing wrong with the weather and the conditions, and you’re careful and abide the speed limits and such, then yes – it should be perfectly safe.

  18. Jennifer says:

    Love you blog Audur! Do you know of any local people who like to go in Ice Caves without a tour? would like to go myself with a local. Is it safe to go if we follow well made paths?

    1. mm Auður says:

      The guides you go on those tours with are locals 🙂

      You should never go to the glaciers on your own – I’m a local and I would never do it because I am kind of fond of my life and limbs! 🙂

  19. This is so helpful Audur, I’m loving all your tips and information! Im going to Iceland March 7-11 should I bring my umbrella then?

    1. mm Auður says:

      No, I don’t think you should bring an umbrella.

      1. jAn says:

        I would say: an umbrella is totally useless in Iceland: when it is raining, you will have (a lot of) wind as well.

        1. Madeleine Barón says:

          Thank you! 🙂 Thats information I didn’t know.

  20. Joy says:

    Hi,
    My best friend and I are heading to Iceland March 1-4. I was searching for different blogs/article about Iceland and yours is one of the blog that I came up to. I have a silly question…may sound stupid for some, but just wondering do you have any recommendation as what we should be packing( coat of course is definitely one of them) anything else we should keep in mind when packing for our clothes?

    Thanks!
    Joy

    1. mm Auður says:

      As it happens, I’ve written several posts on this subject:

      https://www.iheartreykjavik.net/tag/what-to-wear/

  21. Laura says:

    Hi Auöur,
    I was given a fabulous birthday gift of tickets to Iceland! March 6-15. I read your info and you mentioned a Folks Festival that is an annual event but the link to it has dates from 2016. 🙁 Do you have the schedule for 2017?
    And do you have any reccommendations of where to stay in the Capital? Or Where we will enjoy a great dinner in Rekjavik?
    Thank you

    1. mm Auður says:

      I would suggest you contact the folk festival itself for the dates for 2017. You can take a look at these posts for example for where to stay:
      https://www.iheartreykjavik.net/2015/06/best-neighborhood-for-accommodation-reykjavik/
      https://www.iheartreykjavik.net/hotels-in-reykjavik/

  22. Phany says:

    I’m visiting with a few girlfriends in mid march and plan to drive to different destinations. I read that you need to find a reputable car rental that is geared for certain weathers conditions and realiabity. Can you recommend any rental places?

  23. Tricia says:

    Hello! Looking for a bit of advice. My husband and I are traveling to Iceland on a layover March 2-3. We plan to rent a car on the 3rd and wake up early to drive from Reykjavik to Hraunfossar, then continue on to Grunarfjordur, then back to Reykjavik in time to catch our flight at 4:45 that evening. Is this a bit too ambitious for one day, or do you think we could make it with time to sight-see? Also, I am dreaming of petting and photographing an Icelandic Horse – will there be opportunities for this on our road trip? From what I read it sounds like they run free in many parts of Iceland…is that true?

    Thank you!!

    1. mm Auður says:

      Yes, this is too ambitious. A) we still don’t have full daylight in March so it doesn’t make sense to leave really early and B) you need to be at the airport at least 2 hours before departure or around 2:45. Just the driving time, in good conditions, is 5.5 hours: https://goo.gl/maps/MdSyzyajMwP2

  24. Paul says:

    My wife and I are planning on driving to the Jokulsarlon Glacier Lagoon when we visit Iceland March 12-17. Is a 4X4 vehicle recommended and can you recommend a nice place to stay near the lagoons?

    1. mm Auður says:

      I recommend you check out this post: https://www.iheartreykjavik.net/2015/08/do-i-need-a-4wd-car-to-drive-around-iceland/

      As for accommodation, the south is problem area when it comes to accommodation so it’s more the best you can find that is available 🙂 I just use booking.com myself to see what is available as it tends to be the most comprehensive inventory of options. There are 388 properties listed on the south coast

  25. Ethan Goss says:

    Hi,
    I love your blog so far. I am travelling to Iceland with my girlfriend March 12-19th. We are avid Nordic skiers and we are wondering if there are any good ski areas that we could visit that would help us explore the country. We cant wait to see the country.

    Thanks!

    1. mm Auður says:

      The problem with this winter is that we’ve had very little snow. The North and the Westfjords are usually best when it comes to skiing but I don’t know what the conditions are like up there right now.

      But maybe the weather will change soon and we’ll get a full blown winter in March – who knows 🙂

  26. Erin Harris says:

    Hi There,

    My boyfriend and I are leaving tomorrow for Iceland and will be traveling around the ring road in a campervan for a week. After reading your blog I am scared that we have made a mistake by renting the camper :(… Is this going to be safe for us? We have been planing this trip for over a year now and are overly excited for it… Hoping it is all we have hoped it will be.

    Erin

    1. mm Auður says:

      I hope you guys are OK, especially with all the snow we got on Sunday!

    2. Tunde says:

      hey erin, how was the trip with the campervan ? im planning the same trip next year!

  27. Arrol says:

    We are visiting Iceland this year March 20. Just wondering what kind of footwear we need. Will it be wet and slushy?

    1. mm Auður says:

      I think it’s best that you start with reading this post: https://www.iheartreykjavik.net/2017/02/what-will-the-weather-be-like-in-insert-month-in-iceland/

      It’s impossible to say – it’s likely to be wet but what kind of wet is the mystery 🙂

  28. Toccara says:

    My husband and I will be visiting Iceland for a second time during the last week of March. We’ve already visited the Golden Circle, much of the south coast, and the Snaefellsnes Peninsula. We were originally thinking about visiting the West Fjords for our 5 days visit, but read that the roads were a little rough out that way, so we’ve moved our sights towards exploring North Iceland. I know this winter has been relatively mild so far, but would you recommend Ring Road to the North for the last week of March? Would we be ok without a 4WD vehicle? And is Dettifoss accessible this time of year? Any advice you have about visiting North Iceland in late March is much appreciated! Thanks! 🙂

    1. mm Auður says:

      I’ve been up north twice this winter and both times I would not have wanted to be driving a small car. From photos I’ve seen there seems to be a decent amount of snow up there now and there are places where you will run into trouble in a small car.

      Dettifoss is not accessible in winter on a normal car.

  29. Eric says:

    Are taxis, limousines, or Uber easy to find there? I would rather not drive. And, if they are, do we need to make reservations for transport?

    1. mm Auður says:

      Plenty of taxis but no Uber and few limousines. If you plan to go on long excursions reservation is always better.

  30. Nida says:

    This blog is amazing! We are taking a trip in March 2018! Thank you for all the helpful tips! keep it up!!!

    1. mm Auður - I Heart Reykjavík says:

      Glad to hear it – if you need any help with booking tours and such you can always be in touch with us 🙂

  31. Emma says:

    Would you suggest a trip in July as compared to March? I’m nervous about the weather and not being able to properly explore the areas.

    1. mm Auður - I Heart Reykjavík says:

      Both months have their advantages and disadvantages and I wouldn’t recommend one of the other. The only thing to remember if you travel in March is the fact that March is still winter in Iceland but this is something a lot of people don’t realize. July on the other hand is the height of the tourists season in Iceland so it’s much harder to find accommodation and things are more crowded.

  32. Tunde says:

    Hello,
    I’m planning my honeymoon next march between 10 and 20th for a trip in the ring road.I loved the idea of a campervan trip. The ones with the rental said thay they had campers in march and also they are a few campsites open . Maybe they said that just to book the campervan 😀 But what is your opinion? Is it a good idea campervan in march ? we are not very sensitive people,we can put up with a little cold 🙂

    1. mm Ásta - I Heart Reykjavík says:

      Hi Tunde,

      Happy Campers, which we have tried, are only closed December-February, they are open again in March. Some campsites are also open, but not all of them. You would need warm clothes and a very good sleeping bag, but if you are used to camping, this might be right for you. You could also break this up with accommodation at guesthouses and hotels, to get a bit of warmth, or be flexible and open to the idea of buying accommodation as well as using the camper van. Perhaps this post might be useful for you: https://iheartreykjavik.net/2017/06/around-iceland-in-4-days-with-happy-campers/

  33. Kelly Shea McKeigan says:

    My sisters and I are going to be in Iceland from March 29 – April 5, 2018. We are spending a few days on the southwest coast and then traveling to the southeast coast – would you recommend a 4×4 vehicle to drive the Ring Road at that time or do you think I’d be ok driving a regular vehicle? Just wondering if a 4×4 vehicle is necessary at that time of the year.
    cheers

    1. mm Auður - I Heart Reykjavík says:

      It’s impossible to say really, I tried to answer this question with this post: https://iheartreykjavik.net/2015/08/do-i-need-a-4wd-car-to-drive-around-iceland/

  34. priya says:

    we are planning to visit Iceland this 1st week of march 2018. what places to visit in this time? pls recommend some tour, motel or all inclusive tour. I am going to bring my 4 months old boy.

    1. mm Ásta - I Heart Reykjavík says:

      Hi Priya,

      what to recommend depends a lot on how long you have here. I think that generally, travelling with a baby this young, I would suggest renting a car, so that you can take as short or long as suits you at places. that way you can drive while the baby sleeps. Not all tours take children under 6 years old, but some tours do. If you have Reykjavík as your base, you can look at some of the tours here: https://iheartreykjavik.net/the-tours/

  35. chirsteni says:

    Hello,
    I love your blog and find it super useful!
    We’re visiting iceland March 3-9 and we have an ambitious plan to do the full loop by driving.
    our top three destinations that we want to see is glacier caves at vatnakoll+glacier lake, aurora and geothermal areas near lake myvatn, and blue lagoon. do you think it’s possible to do all this in winter conditions?

    1. mm Auður - I Heart Reykjavík says:

      It’s probably possible (depends on the weather though) but it’s not recommended.

  36. Ryan says:

    Hi,

    I am planning to visit Iceland this March. I’m a solo traveler it’s my first time. I’ll be staying there for 7 days with a limited budget. I’m coming from Italy. If ever I will stay in Reykjavík for 4 days do you think, I could visit also the other tours? Like in the south? I’ll be using only public transportations. And how’s the weather on March? Like from March 16 till the 23rd. At the hostels, do they offer also some Tours? And how much is the ticket to the blue lagoon? Is it a Daily ticket valid for the whole day or its just for a limited time? Please, I do need help. Thank you very much!
    I love your blog! 😉

    1. mm Ásta - I Heart Reykjavík says:

      Hi Ryan,

      I would suggest trying to do some tours, there are some good budget tours on offer and you can check some out here: https://iheartreykjavik.net/the-tours/
      Public transport gets you to villages and towns, but not to nature sights or national parks – and I have to admit that public transport is not cheap, so I think you could use a similar or not very much higher amount and get a lot more out of your stay. If you are here for 7 days, I would suggest maybe a daytour to the South Coast, Golden Circle and Snæfellsnes. I would suggest trying to save money on food and accommodation, so that you can enjoy a bit of the countryside – and Reykjavík is nice too! We never know what the weather is going to be like, so bring some warm clothes. Hostels generally don’t run their own tours, but are re-sellers of tours. And the price for the Bleu Algoon depands on how much you want included (like a towel or a bathrobe or a drink), on the time of day, and availability, but from 6990 ISK. You can always use your ticket for as long or short as you want within that day, so if you want to spend the whole day there (which might be a bit long), you can and for the same entrance fee.

  37. Tanya says:

    Hi !
    I want ask you about sandstorms in March. Could it happen?
    I need to know, becouse most of rentals car company provide sand and ash damage waiver covers the car from sandstorm… is this possible in winter conditions?
    Thanks!

    1. mm Hrannar - I Heart Reykjavík says:

      Hi Tanya

      Hopefully everything will be snowy and frozen in March. So I would say that you don’t need sand and ash coverage.

      But again, this is Iceland so we never know. I just hope not.

      -hrannar

  38. Sridhar says:

    Hi,

    We are visiting Iceland in March 2018 (from 07 to 11) for the first time and planning to stay in Reykjavík, do you recommend any places nearby to make the trip memorable. March 8, 9 and 10, 3 days we are planning to go out and explore the city.
    1) Let us know is it safe to rent a car, will there be a large amount of snow on the roads.
    2) Let us know the best places to visit during this dates.
    3) Is it possible to cover Blue Lagoon, Glacier lake, and mainly aurora.

    1. mm Ásta - I Heart Reykjavík says:

      Hi Sridar,

      We never know what the weather is going to be like, and if there is going to be snow and ice on the roads or not. Perhaps this post could be useful: https://iheartreykjavik.net/2017/02/what-will-the-weather-be-like-in-insert-month-in-iceland/
      If you are not used to driving in winter conditions, think about if you are ready to do that, and if you decide to rent a car, I would suggest going for a 4×4 at that time of year. If you are lucky and teh conditions are good, you don’t need a car that big, but you might feel more safe in a bigger car. It’s really still winter time in Iceland in March.
      Places to visit depend entirely on what you are interested in, and visiting the Golden circle and the south Coast to the Glacier lagoon would fill 3 days. You then might be able to visit the Blue Lagoon on the way to or from the airport, depending on the arrival and departure times of your flights. For information about the Northern Lights, this might be helpful: https://iheartreykjavik.net/2017/08/the-best-time-to-see-the-northern-lights-in-iceland/

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