Italian new car sales are set to fall 10 to 20 percent in April as the end of government car buying incentives starts to bite, Fiat brand Chief Executive Lorenzo Sistino said on Tuesday.

Earlier this month Italian study group Promotor said it expected the Italian market to start contracting from April as the order backlog from scrappage incentives -- which stopped at the end of 2009 -- runs down.

We are seeing a double-digit fall ... (of) 10 to 20 percent, Sistino told reporters on the sidelines of the media launch of the Alfa Romeo Giulietta car. The decline would be in line with other markets such as Germany which suffered a 26.5 percent year-one-year drop in March following the withdrawal of incentives.

In March Italian car sales were up 19.6 percent, benefiting from orders placed when incentives were still in place.

Sistino said he saw the Italian car market as a whole reaching 1.7 to 1.8 million units in 2010, compared with 2.16 million units last year.

At 1127 GMT Fiat shares were down 1.9 percent at 9.57 euros, off their lows of the day. The STOXX Europe 600 auto sector index .SXAP was down 0.6 percent.

The fall in the new car registrations expected in April is penalizing the shares, a trader said.

Referring to the Giuletta hatchback model, seen as a key tool for reviving the sporty, 100-year-old Alfa Romeo brand, Alfa chief Harald Wester said he aimed to sell 100,000 per year when sales are running at full steam from 2011.

For the brand as a whole, Wester said he was aiming for total volume in Europe of over 120,000 vehicles this year. Alfa sold around 110,000 vehicles last year worldwide, most of which were in Europe.

There will be a significant contribution from the Giulietta, Wester said.

Fiat group Chief Executive Sergio Marchionne said in January the Alfa Romeo brand was not up for sale but he was working to determine a new strategic direction for it.

The Giulietta -- whose 1.4 TB 120 hp model will go on sale in Italy at just over 20,000 euros ($27,210) -- should sell around 40,000 units this year in Europe, Wester said.

The Fiat group as a whole is due to outline its strategy on April 21 at a presentation to investors in Turin.

(Editing by Greg Mahlich and David Holmes)

($1=.7351 Euro)

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