Under the government's stimulus package, people trading in their cars will receive a payment of up to $1,930 to buy a new, more fuel efficient one.
Consumers will also receive a 20 per cent tax deduction on appliance and furniture purchases of over $12,890.
The plan is the latest attempt by Italy's government to boost the economy amid the global financial crisis, after an economic stimulus plan announced in November was criticised for being ineffective.
Other European nations have also moved to prop up their car industries during the global downturn.
Britain is guaranteeing up to $3.37bn in loans to the sector, while France has said it could inject up to $7.73bn of aid. Germany has also introduced measures worth $1.93bn.