Italy weighs 1 billion Euros in annual aid to boost car industry

Rome: Italy may earmark funding of as much as 1 billion euros ($1.1 billion) per year to help support its stricken auto industry, Economic Development Minister Giancarlo Giorgetti said on Thursday.

The possible three-year plan, which could be approved as soon as Friday, includes incentives and financial support for converting industrial capacity toward more environmentally friendly models, Giorgetti said in an interview with financial daily Il Sole 24 Ore.

Europe’s car industry is in the midst of its worst period for new registrations since the European Automobile Manufacturers’ Association began tracking the market in the early 1990s. Registrations fell 2.4% to 822,423 in January compared to last year, the association said Thursday.

Multinational car maker Stellantis NV, which runs about a dozen plants in Italy, has been hit particularly hard by the pandemic, with a knock-on effect for its network of suppliers, an Italian parliamentary intelligence committee said last week. Stellantis, formed through the 2021 merger of France’s PSA Group and U.S.-Italian group Fiat Chrysler, employs some 50,000 workers in Italy.

The committee also called on Italy’s state-backed lender Cassa Depositi e Prestiti SpA to buy a stake in Stellantis in order to balance France’s holding in the company.

Although the new measures aim to nudge Italy’s auto makers toward electric vehicles, Rome would still support production of some gasoline, diesel and hybrid cars, the minister said. “Helping only on the electric side would be doing a favor to foreign car makers,” Giorgetti said in the interview. “We also need to encourage purchases of cheaper vehicles by less wealthy people.”

Italy has been seen as a laggard in electric-vehicle production, as the government has lobbied the European Union to postpone deadlines for internal combustion phaseout plans in a bid to buoy high-performance car makers like Ferrari NV and Lamborghini SpA.