ROME, (Reuters) – The Italian Prime Minister Mario Draghi issued a decree to provide 650 millions euros ($709million) each year for incentive purchases of low-polluting or electrified cars. This was announced Wednesday by the industry ministry.

This outlay forms part of an 8.7 billion Euro long-term plan Italy launched earlier in the year to help its automaking sector. The plan allocates 700 millions euros for 2022, and 1 billion euro per year between 2023- 2030.

Incentives, announced by Rome earlier in the year, had a negative impact on sales of cars for the first month of 2022. Analysts and lobby groups claimed that buyers were putting off purchases as they waited for government implementation.

Italy’s new car registrations fell by around 23% and 30% between February and March compared to the previous year.

Rome will pay up to 5,000 EUR to cover the cost of new electric vehicles, up to 35,000 € excluding VAT.

This includes a contribution in the amount of 2000 euros for the destruction of polluting engines, according to the decree.

A subsidy will be provided for the purchase of plug in hybrid electric cars up to 45,000 euro. Additionally, a 2,000-euro incentive is offered to encourage purchasing state-of–the-art Euro6 combustion engines (Euro6) cars up to 35,000 EUR when old vehicles are scrapped.

According to the decree, funds are available to incentivize new motorcycles or for small and medium-sized businesses to purchase fully-electric vans.

($1 = 0.9169 euros)