Italy considers subsidies for latest combustion engine cars

Italy is considering incentives of up to 4,000 euros ($4,550) to buy the latest generation of petrol and diesel cars, joining France and Germany in offering support to the automotive industry, which has been hammered by the coronavirus crisis. The co-ruling center-left PD party, supported by the centrist Italia Viva, has proposed including the incentives in an economic stimulus package currently under discussion in parliament, which is expected to be approved by mid-July.

The subsidy would be offered to buyers of state-of-the-art 'Euro 6' thermally efficient vehicles and would reach 4,000 euros if buyers scrap cars that are 10 years old or more. Share in Fiat Chrysler, Italy's largest automaker, was up 4.75% to 9.11 euros at 0810 GMT.

Both France and Germany are also aiming to use incentives to accelerate the shift to cleaner driving, offering subsidies to buyers of electric vehicles. Italy already offers subsidies on electric and hybrid car purchases.

New car registrations in Italy fell 50% in May when Rome started to progressively lift lockdown measures after-sales were virtually wiped out in April and March. Incentives would be financed partly by the government via a 250 million euro package and partly by car dealers, according to an amendment to the economic stimulus decree.

The proposal is likely to cause new disagreements within Italy's ruling coalition, with the anti-establishment 5-Star Movement opposing any incentives for combustion engine cars. However, Industry Minister Stefano Patuanelli, a prominent 5-Star member, said on Friday that in "this exceptional time" Italy needed to "think about ways to support sales, without affecting environmental targets".

Measures to support Italy's automotive market could also be extended as soon as the end of this year when Rome might be allowed to front-load part of the money it would receive from Europe's recovery fund. ($1 = 0.8794 euros)

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