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Italy to introduce subsidies for combustion engine cars to help industry

Italy to introduce subsidies for combustion engine cars to help industry

The Italian parliament gave the green light on Friday to a package of incentives to encourage sales of state-of-the-art combustion engine cars as well as electric and hybrid vehicles, two lawmakers told Reuters.

Italy will be joining France and Germany in helping the automotive industry, which has been hammered by the coronavirus crisis.

However, unlike Berlin and Paris, which have focused on "green" cars, Rome is also targeting "Euro 6" thermally efficient vehicles as electric and hybrid cars still have little foothold in Italy.

Last year, electric cars accounted for just 0.56% of total Italian registrations, with hybrids at 6.1%, according to foreign car manufacturers association Unrae.

Marco Opipari, an analyst at Fidentiis, said cars produced in Italy before the lockdown and left unsold were all Euro 6 vehicles.

"If you want to address this backlog of unsold cars and provide oxygen to the industry, you need to support purchases of combustion engine cars too," he said.

Rome will offer buyers of Euro 6 vehicles with a price lower than €40,000 (roughly R764,533) an incentive of €3,500 (roughly R66,896) if they scrap cars that are 10 years old or more, according to the legislation voted on by the lower house's budget committee. The existing subsidies for electric and hybrid cars will also be bolstered.

The legislation will be in force from August until December, with the costs to be shared between the government and car dealers.

Fiat Chrysler, Italy's largest car maker, is only now rolling out its first alternative-engine models, with an electric version of the Fiat 500 small car and plug-in hybrid versions of Jeep's Renegade and Compass models due this summer.

New car registrations in Italy fell by almost 500,000, or 46%, in the first half of this year, according to transport ministry data. The number of lost registrations could total around 700,000 units by the end of 2020, Unrae said.