Italian new car registrations rose a stronger-than-expected 7.9 percent in July, data from the Transport Ministry showed on Tuesday, with Fiat's market share bouncing off a historic low in June to 28.7%, according to Reuters.

The news agency said the Fiat group continued to lag the overall market, with sales rising 5.2%, but it was still a positive sign for the loss-making car maker, which had seen sales fall for all but two of the last 18 months, dragging it deep into crisis.

Reuters said industry sources had forecast July car sales would be in line with last year, when a steep drop in registrations slowed thanks to the introduction of incentives on eco-friendly cars.

Instead registrations boomed to 220,600 units, showing the first rise in sales since the incentive scheme ended in March, the report added.

A breakdown showed that sales of the Fiat brand rose 5.5% year-on-year in July, the first full month of sales for the new version of its Punto city car, Reuters said.

Fiat-owned Alfa Romeo posted a 17.4% jump in sales while Lancia, which is due to start selling a new version of its mini Ypsilon model in September, fell 6.3%, the report said.

Reuters said Fiat gained back some market share from its historic low of 27% in June but competitors are still on its tail, with Asian and French cars still gaining ground.

For example, Reuters noted that Citroen whose rounded C3 model has taken Italians by storm, grabbed 6.1% of the market, up almost 50% year on year, while Nissan more than doubled its Italian sales to grab 3% of the market while other Asian brands like Kia, Daewoo and Mazda -- which still have a small presence in Italy -- rose more than 40%.