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

(Bloomberg) —

Italy could allocate funding of up to 1 billion euros ($1.1 billion) a year to help support its struggling auto industry, Economic Development Minister Giancarlo Giorgetti said on Thursday.

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

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

Multinational carmaker Stellantis NV, which operates a dozen factories in Italy, has been hit particularly hard by the pandemic, with a ripple effect on its network of suppliers, an Italian parliamentary intelligence committee said last week. Stellantis, resulting from the merger in 2021 of the French group PSA and the American-Italian group Fiat Chrysler, employs some 50,000 people in Italy.

The committee also called on Italian lender Cassa Depositi e Prestiti SpA to take a stake in Stellantis to balance France’s stake in the company.

Although the new measures aim to push Italian carmakers towards electric vehicles, Rome would still support the production of certain petrol, diesel and hybrid cars, the minister said. “Helping just the electrical side would be doing foreign automakers a favor,” Giorgetti said in the interview. “We also need to encourage less wealthy people to buy cheaper vehicles.”

Italy has been seen as a laggard in the production of electric vehicles as the government pressured the European Union to postpone deadlines for plans to phase out internal combustion in a bid to support automakers from high performance like Ferrari NV and Lamborghini SpA.

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