The Italian government is considering a new incentive scheme to support the Italian car market amid fears that it would see a big fall without them, an analyst told just-auto today.

Pete Kelly, an analyst at JD Power Automotive Forecasting, said that there is likely to be some clarification from the Italian authorities by the end of the month.

“There is currently some confusion in Italy about the government position on incentives,” he said.

“December’s spike in Italian sales certainly reflected a market desire to conclude sales ahead of the apparent ending of the existing scheme.”

New car registrations in Italy in December were up 15.5% on last year, with the seasonally adjusted running rate (SAAR) for the month estimated by JD Power to be in excess of 2.8m units.

Kelly expects the Italian government to follow the French example and opt for a phased withdrawal of incentives in 2010.

“A look at the pattern of past incentives in Italy would suggest that the Italian government will likely opt for more support in a manner that avoids a sudden plummet in the market – something which would likely follow an immediate full cessation of incentives,” he said.

Sources in Italy suggest that new incentives for car purchase in Italy could be announced by the government in late January when an assessment has been made on available public funding.

Fiat has warned that the Italian car market could decline from 2.16m units in 2009 to 1.7m units if incentives are fully removed. The Italian car market leader is lobbying for continued incentives to be phased out over a two-year period.

JD Power currently forecasts that the Italian car market will decline by a little over 1% in 2010, assuming reduced incentives are in place. And sales in the first part of the year will likely look strong when set against a weak start to the Italian car market in 2009.

“A slight decline is our overall assessment in comparing the likely evolution of sales this year compared with 2009, which eventually saw some considerable uplift from incentives. But last year we saw a very weak first quarter in Italy, so January’s sales – even with the incentives uncertainties and following on from December’s spike – should still come in ahead of the same month last year.

“And there could be another minor spike in sales at the end of 2010 when the next batch of incentives may be due to expire or be reduced further. But clearly underlying demand is not strong in Italy and remains highly sensitive to timings on any official incentives, something that the car manufacturers are also attuned to in terms of their marketing activity,” Kelly said.