Fiat has said that it will match government incentives for new car prices via lower car prices and cheaper finance in order to boost the Italian car market and Fiat volume.

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The government confirmed late last week that buyers replacing models without a catalytic converter for environmentally-friendly new small and medium sized cars, will be exempt from paying the annual licensing fee for the first three years of ownership.


Italian politicians have made it very clear that they have been looking at ways to help Fiat within EU rules. The Italian car market fell back sharply in June as consumers held off from car purchase amid the widespread expectation of an announcement on incentives.  The move by the government circumvents European Commission rules on State Aid, but benefits Fiat more than other makers because of its relatively high Italian market share and heavy presence in small car segments.


Fiat has said consumers buying a new car to substitute an older model under the government scheme will be offered financing at no cost for as much as 12,000 euros per model. The company will also offer discounts of as much as 1,476 euros per car.


Analysts say that the new government incentive and Fiat’s actions to match them could add between 100,000 and 200,000 units to this year’s Italian new car market.

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The Italian car market declined by 18% in June and Fiat’s share continued its declining trend. The Italian car market has also been the source of intense competition and low margins; observers note dryly that as recently as May, the carmaker said that it would cut back on discounts in order to restore profit margins.