The uptick in demand has allowed Fiat to cancel short-term layoffs for 5,200 workers who make the Grande Punto in Melfi, 1,400 who make the Lancia Ypsilon in Termini Imerese, Sicily, 1,000 who make the Alfa Romeo MiTo and 500 who make the Fiat Multipla at the Mirafiori plant in Turin.

Temporary plant shutdowns and layoffs have affected some 48,000 Fiat blue-collar and 1,800 white-collar workers this year. Some planned layoffs will continue, including in Naples, Fiat said.

With its incentives, Italy joined Britain, France and Germany in helping out car makers as sales tumble.

However, the European Commission on Friday raised questions about Italy's incentive program, which is aimed at not only the auto industry but also household appliance makers, saying it could break some competition rules.

EU spokesman Jonathan Todd said the European Commission was asking the Italian government for clarifications on the plan, to be provided within five working days.