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UNCLAS SECTION 01 OF 02 ROME 000188 
 
SIPDIS 
 
DEPT FOR EEB/TPP/MTAA (NAFZIGER) 
DEPT PLEASE PASS TO USTR (RMALMROSE) 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EFIN PREL WTO IT
SUBJECT: ITALY APPROVES AUTOMOBILE SECTOR ASSISTANCE PACKAGE 
 
REF: A) SECSTATE 4753 B) 08 SECTATE 125609 C) 08 MOSCOW 3745 
 
ROME 00000188  001.2 OF 002 
 
 
¶1. (U) Summary: On February 6, 2009, the GOI approved an automobile 
sector assistance package as part of a broader industrial sector 
stimulus package. The auto sector measures provide consumer 
incentives, ranging from 500 to 6500 euros, to increase demand and 
do not appear to give direct support to any one company. The 
stimulus package goes into effect immediately, but must still be 
approved by parliament within 60 days. Its passage is expected. End 
summary. 
 
¶2. (U) Hit by a fall in total auto sales of 13.4 percent in 2008, 
11.4 percent from flagship producer Fiat alone, the GOI put together 
an automobile sector assistance package designed to stimulate demand 
and counter an estimated further fall in sales for 2009.  According 
to the Ministry for Economic Development, the Italian auto sector 
activity represents about 11.4 percent of GDP (165 billion euros), 
makes up 30 percent of the total industrial output, and employs 
400,000 workers directly and 1 million indirectly.  While welcoming 
the stimulus package, Italian trade unions, car workers and the 
national industry association also expressed disappointment at its 
modest size compared to what other UE countries have offered their 
auto sectors. 
 
¶3. (U) The automobile support package includes incentives from 500 
up to 6,500 euros for consumers and businesses that trade-in old 
cars, commercial vehicles or scooters for new models meeting certain 
parameters of CO2 emissions.  For example, there is a 1500 euros 
incentive for consumers trading vehicles purchased before December 
1999 for new gasoline models emitting less than 140 grams/km of CO2, 
or less than 130 grams/km for diesel.  According to the GOI, this 
specific measure is compliant with the EU CO2 automobile emissions 
Directive. For the acquisition of new vehicles alone, the incentive 
payments range from 3,500 for methane gas, electric or hydrogen 
fuel models to 6,500 for vehicles with minimum CO2 emission. 
 
¶4. (U) The vehicle buyer will receive the incentives through 
discounts directly from the car dealerships, which will in turn 
receive a tax rebate from the GOI for the same amount. Preliminary 
information suggests that the incentives apply to the purchase of 
domestic-and foreign-manufactured vehicles.  Post can provide 
further details on the breakdown of the incentives based on CO2 
emissions if necessary. 
 
¶5. (U) The package also includes a 55 million fund to support 
reduction of CO2 emissions by local public transportation systems. 
It will be available for local governments and municipalities that 
purchase low CO2 emitting technology for their public 
transportation. However, much of the funds (44 million euros) will 
come from expected increases in value-added taxes. 
 
¶6. (U) Comment: According to the GOI, these measures are meant to 
counter a further contraction of the automobile sector.  The GOI 
estimates that 60,000 jobs will be at risk in this sector and that 
its further contraction may contribute to a drop of 0.5 percent in 
 
ROME 00000188  002.2 OF 002 
 
 
GDP this year. One Italian bank estimated that the auto sector 
assistance package could boost vehicle sales by 200,000 units in 
2009 and reduce the expected annual drop in sales from the 20 
percent that has been forecast to 10 percent. The stimulus plan 
appears to be broadly in line with similar packages unveiled by 
France, Germany and the UK. End comment. 
DIBBLE