Italy 's technocratic government is to introduce financial incentives next year to encourage individuals and fleet operators to buy vehicles that emit little or no carbon dioxide, according to industry representatives Wednesday.

The government is to present in January a three-year 140 million euro ($179 million) plan that should boost the sale of vehicles that run on alternative fuels, or use hybrid or electric technology, said the representatives at an industry event.

"It's a small step," said Jacques Bousquet, head of Unrae, the Italy 's foreign automakers' association.

Unrae and other industry bodies have been working with the government to encourage the purchase of new vehicles to bring some reprieve to dealers who have seen sales plunge to their lowest levels in more than 30 years.

The plan, which follows the passage of a decree into law in August, has earmarked EUR50 million worth of incentives for the first year, EUR5 million of which are for individual drivers and the remainder for fleet operators, Antonio Cernicchiaro, director of institutional relations at Unrae, told Dow Jones Newswires.

The EUR5 million worth of incentives for the retail market should lead to the purchase of some 1,000 vehicles in 2013, he said.

The ministry of economic development, with which Unrae and others negotiated the terms of the plan, was unavailable for immediate comment.

Sales of electric vehicle in Italy are behind those registered elsewhere in Europe because the government has yet to help build a network of battery recharging stations, said Francesco Fontana Giusti, spokesman for Renault SA (RNO.FR) in Italy . "The infrastructure is limited."

Renault, which has invested heavily in creating a portfolio of electric vehicles for the mass market, has sold about 1,600 of them in Italy since the beginning of the year, he said.

Fiat SpA (F.MI), whose home market is in Italy , has preferred to invest in engines that run on alternative fuels such as methane. It has also argued against any sort of incentive from the government, saying it distorts demand.

But the call for incentives has risen from dealers as the crisis in Italy and elsewhere in Europe has decimated demand for new cars, forcing automakers to engage in a price war as well as make deep cuts to their operations, raising the prospect of job losses and plant closures.

Mr. Bousquet said the price war wasn't allowing anyone to make much money, threatening the livelihood of many dealers, especially small ones.

New car registrations in Italy fell by 19.86% to 981,030 units between January and August, and Mr. Bousquet said he didn't expect an improvement any time soon.

The registrations will likely repeat the fall recorded in August, going down by between 20% and 30% in September because the crisis was showing no sign of letting up.

"We're in a difficult situation," he said. Registrations would have difficulty reaching a total of 1.4 million units this year, he said.

"We don't even expect a recovery (in the car market) in 2013," he said.

Federazione Italiana Concessionari Auto, or Federauto, a federation of car dealers in Italy , has forecast a market of 1,370,000 vehicles in 2012--630,000 less than the average for the last five years.

Italy is continental Europe 's third biggest market by unit sales.

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