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Italian government meets with car industry to tackle sales crisis

Thursday, 24 Oct 2013 | 1:25 PM ET

ROME, Oct 24 (Reuters) - Italy's Industry Ministry, carmaker Fiat and other industry representatives have created a working committee which met on Thursday to look at what can be done to help lift car sales from a 34-year low, the ministry said on Thursday.

A toxic mix of factors including a weak economy, tight credit conditions, the highest road fuel prices in Europe, fewer new models from Fiat and a crackdown on tax evasion, that has hit luxury car sales, has prompted the industry to put more pressure on the government for action.

Europe's overall car sales fell to a 20-year low in the first half of 2013, but Italy's market has been worse, and is expected to contract this year to its lowest level since 1979.

The group did not discuss cash incentives to boost car sales, said Industry Ministry Undersecretary Claudio De Vincenti after the meeting, but he added that it will meet again in November to discuss specific proposals.

According to 2012 data provided by industry trade groups, the car industry accounted for 11.6 percent of Italy's GDP and 16.6 percent of tax revenues.

"The government doesn't have a lot of money to spend, so we have to be pragmatic," automotive industry association Anfia's chairman, Roberto Vavassori, told Reuters after the meeting.

Anfia will propose at the next meetking measures such as support for corporate and rental fleet sales, reducing registration taxes, cutting insurance costs and enlarging Italy's alternative fuel distribution network, he said.

The working committee is the first time Italy has brought together manufacturers, distributors and other industry groups.

"It's an important step," said Filippo Pavan Bernacchi, head of the car retailers' group Federauto.