TURIN -- Italy's government promised to unveil a package to help the country's auto industry within the next 10 days.
The government is looking at incentives for car buyers totaling around 300 million euros, according to Italian media.
The incentives are likely to include offering consumers 1,400 euros to 1,500 euros to trade in old cars for cleaner, new models and easier credit terms. Until December, the government offered a a 700-euro incentive toward a new car if a customer scrapped a car more than 10 years old.
The measure is expected to add about 150,000 to 200,000 of sales this year, smoothing a decline in new-car sales in 2009 currently seen at 1.85 million units from 2.16 million units in 2008.
To balance the estimated 300 million euro cost of a scrapping incentive, the government is also reportedly considering a 500 euros tax penalty for high polluting vehicles such as large SUVs.
On Wednesday, crisis talks involving the Italian government and auto industry leaders failed to produce concrete aid measures.
"It was a pretty disappointing meeting. There is awareness of the seriousness of the situation, but no precise guidelines nor clear and adequate financial resources have emerged," said Roberto Di Maulo, leader of the Fismic union.
Industry Minister Claudio Scajola told the meeting that Italy's car sales could fall nearly 17 percent this year after a 13 percent drop in 2008, one of the union leaders who attended the meeting said.
Scajola added the crisis could wipe 0.5 percentage points off Italy's gross domestic product through lower tax revenues and the costs of supporting idled workers.
Italy's automotive sector in Italy employs 375,000 people directly and indirectly. With an annual turnover of 165 billion euros, it accounts for 10.7 percent of gross domestic product, according to the national auto industry association ANFIA.
Reuters contributed to this report