TURIN - Italian sales are up almost 25 percent this year thanks to the government's new car-scrapping incentive.
Sales rose more than 50 percent in April- surprising analysts and carmakers.
After four years of crisis, total sales in 1997 are expected to surpass 2 million.
Italian sales averaged 1.7 million units from 1993-1996 after averaging 2.35 million in the golden years from 1989 to 1992.
Market share for the Fiat brand is going up. The incentives have also boosted sales of small cars.
Incentives will end in September and many carmakers want a 'soft landing.' They are asking for new incentives in 1998, possibly with a lower government discount.
So far only environment minister Edo Ronchi supports a new round. He wants new incentives to focus more on environmental goals than vehicle age.
Under the current scheme, private citizens who scrap a car older than 10 years get a L1.5 million ($895) discount on a new car under 1.3 liters and L2 million for cars over 1.3 liters. Manufacturers and dealers double the discount, giving a total reduction of L3.3 million-L4.4 million.
It is not certain when the current program will end. The law says it will apply to customer orders signed by 30 September, without setting a deadline for registering the car. There is even doubt about how to legally define orders signed by 30 September.
Italian passenger car registrations rose 52.4 percent in April to 231,500 units. It was the second best April result ever after sales of 244,795 units in 1992.
In the first four months sales rose 24.3 percent to 857,000 units.
While the car scrapping incentive is clearly a success, the more than 50 percent jump in sales in April was still unexpected. Fiat Auto Managing Director Roberto Testore had forecasted growth 'well over 40 percent.'
According to Italy's InterAutoNews Data Center, incentives represented 48 percent of March registrations and 54 percent of orders.
Analysts estimate that at least 300,000 units were scrapped in the first quarter.
The incentives are mainly boosting sales of sub-minis and minis, including Fiat's Cinquecento, Panda and Punto, and their imported rivals.
In April, Fiat brand sales increased 66 percent. Fiat gained two points of market share, reaching 35.9 percent.
Alfa Romeo sales rose 35.6 percent over April 1996, gaining 0.4 points in share to 4.2 percent.
Lancia grew a modest 11.5 percent, losing two points in share. The combined gain of Italian makers' share in April grew from 44.4 percent to 44.9 percent.
In the first four months, Italian makers' share was still below last year's levels - 43.7 percent compared with 44.9 percent.
Fiat brand is up over 1 percentage point, Alfa and Lancia down 1 point each.
In the first quarter of 1997, the two small-car segments represented 56.1 percent of the total, compared with 50 percent during all of 1996 and 52.9 percent in 1995.
The biggest gainers in April were Hyundai, up 176 percent; Skoda, up 168 percent; and Citroen, up 116 percent.
Only three carmakers were down: BMW, -12.3 percent; Chrysler, -6.1 percent; and Saab, -33.5 percent.
Among volume makers, Rover sales rose almost 81 percent, followed by Renault, up 72.5 percent; and Peugeot, up 64.6 percent.
For the full year, Hyundai and Skoda are up 107 percent and 103 percent respectively. Citroen sales grew 64.7 percent, followed by Rover, up 60.6 percent.
Only four brands are down for the full year: Alfa and Chrysler, both -8 percent; and Saab, -43.6 percent. Lancia is down -0.49 percent.