The Italian government on Friday adopted an emergency plan to help the automobile sector which has been hit hard by the global economic crisis, reports ANSA. The package also included measures to boost the sales of motorbikes, home appliances and furniture, for which demand has plunged in recent months. Fiat's share price closed up by 6.84 percent in brisk trading.

The measures were contained in a decree which takes immediate effect and needs to be approved by parliament within 60 days. Industry Minster Claudio Scajola explained that it was imperative to adopt the decree ''because the automobile market is at a standstill''.

Premier Silvio Berlusconi said that measures contained in the package ''could boost consumer spending by between 0.5% and, optimistically, 1%. In turn this could significantly improve prospects for GDP this year, which is currently expected to shrink by 2%''.

Without these measures to boost the automobile and durable goods sectors, the premier observed, ''the state would have lost 700 euros in VAT revenue, taken in 1.2 billion euros less in tax revenue and seen additional welfare costs in the neighborhood of 500 million euros''. The premier added that in return for these incentives the government expected automakers to ''keep their plants in Italy, invest in new products and pay in full their component suppliers who are suffering dearly from the crisis''.

The government's action received a cool response from the automobile sector and consumers, both of which saw the measures as insufficient. ''We are not totally satisfied with the incentive plan and, frankly, expected more,'' the Italian Automobile Club (ACI) said in a statement. Consumer groups Federconsumatori and Adusbef branded the government's package as ''totally insufficient''. ''We would have liked to have seen greater and more selective attention paid to Italian industry as a whole, the way other European countries are going,'' they said. The head of Italy's industrial employers association Confindustria, Emma Marcegaglia, agreed and said the package ''is a step forward but much more needs to be done'' to help industry. The government's action boosted Fiat shares in Milan which shot up by over 6% and helped pull up the whole stock market. Significant gains were also posted for motorbike and Vespa maker Piaggio, auto component companies and, to a lesser extent, appliance makers.

The incentives, which expire at the end of the year, included a cash bonus of 1,500 euros for the purchase of new cars, those with a Euro 4 or Euro 5 emissions rating, in exchange for trading in old ones with an emissions rating of Euro 2 or less, which will then be sent to the junk yard. A bonus of 2,500 euros will be given for the trade-in of light commercial vehicles with high emission ratings - Euro 0, 1 and 2 - in exchange for new, less polluting vehicles. A 1,500-euro bonus will be given for the acquisition of vehicles which run on electricity, hydrogen, methane or natural gas regardless of whether an older car is traded-in or junked. A 500-euro bonus will be given to those who trade in their old Euro 0 and 1 motorbikes for those with a Euro 3 rating and with motors up to 400cc. A proposal to exempt owners of new cars from paying their road tax for the first three years was not approved.

The decree will allow Italians a 20% tax write-off on the purchase of home appliances and furniture. There is a limit of 10,000 euros on how much can be spent on these products and the write-offs only apply to those who filed requests to restructure their homes before July 2008. Other countries in Europe are considering similar measures to boost their automobile markets.

France says it is ready to invest between five and six billion euros to save its automobile industry, while Spain is offering 1,200 euros to trade old vehicles for new ones as well as interest-free car loans up of to 10,000 euros. Germany is offering a bonus of 2,500 euros to trade in cars which are over nine years of age, while Britain has reduced VAT on new car sales.