Italy May Renew Car Scrappage Scheme

by Ulrika Lomas, Tax-News.com, Brussels

07 January 2010

Despite the economic recession, the number of new cars sold in Italy in 2009 reduced by only 0.17% compared to the previous year, largely due to the positive effects of the government’s eco-incentive scheme.

The eco-incentive scrappage scheme, which ended on December 31, 2009, gave EUR1,500 (USD2,150) to those who purchased a new low-emission petrol or diesel car, after scrapping an old vehicle produced before end-December 1999.

Additional cash incentives were given for the purchase of vehicles, including hybrids, fuelled by methane or LPG gas, or by electricity or hydrogen.

Almost one-half of the new cars sold in Italy in 2009 were purchased under the scheme – nearly 1.06m, out of a total of 2.16m. Its effect was particularly felt towards the end of the year.

In December, for example, cars sold in Italy during the month were some 165,400 (more than 16.7% up year-on-year), out of which cars under the scrappage scheme amounted to almost 100,600.

The car industry is now underlining the necessity to renew the scheme in order to maintain the improvement in the auto market into 2010. It has been estimated that cars sold in 2010 could fall to only 1.75m this year if the incentives were cancelled. It is pointed out that, in Italy, there is still a need to take older cars off the road to reduce further the vehicles being driven with higher emissions.

The government has previously underlined that incentives for the auto sector were likely to be less next year, as part of a gradual reduction so as not to distort the market, and that Italy would have to move in line with the rest of the European Union.

From his point of view, the president of the Automobile Club d’Italia, Enrico Gelpi, has disclosed that he has written to the government suggesting that the scrappage scheme should favour, not only those cars with low emissions, but also those with the most up-to-date safety systems, such as electronic stability control, so as to prevent road accidents.

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