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Part 64 Lancia – The End of an Era

The History of the Italian Automobile

Part 64 Lancia – The End of an Era

By David Cavaliere

The formation of Fiat Chrysler Automobiles (FCA) has been a huge turning point for Fiat. The company may have been slow to embrace globalization, but Chairman and CEO Sergio Marchionne has done a masterful job integrating the Fiat and Chrysler families. Beginning in February 2007, Fiat's automotive operations were reorganized. Fiat Auto became Fiat Group Automobiles S.p.A. and Lancia Automobiles S.p.A. was created from the pre-existing brand. In 2011, Lancia moved in a new direction by adding models manufactured by Chrysler and sold under the Lancia badge in many European markets. It was as though no one noticed. The plan was shelved after a few years. The product did not match the quality and luxury level of a traditional Lancia and was not an effective competitor in the premium car segment.

In 1979, Lancia released the first Delta, a five-door hatchback designed by Giorgetto Giugiaro. The car evolved over its life into many versions and although barely known in the U.S., it is highly regarded overseas and was voted 1980 European Car of the Year. 1982 brought the first facelift for the Delta and the first of many sporting variants - the Delta GT 1600, powered by a 1585 cc, twin-cam engine. The following year the Delta HF was introduced. The HF acronym - last used on the Stratos, stood for "High Fidelity" and had been used on performance version of Lancia cars since 1966. The car was front-wheel drive and powered by a turbocharged re-engineered version of the 1.6-litre engine from the Delta GT. Fitted with revised suspension, brakes and body panels, about ten thousand Delta HF were produced in a two-year production run. In 1986, the top-of-the-range Delta became the turbocharged 2.0-liter, four-wheel drive Delta HF. Continual evolution, a Lancia hallmark, saw the Delta HF Integrale introduced the following year and the mighty 16-valve Delta HF Integrale 16v in March 1989.

An interesting offshoot was the Lancia Hyena, a 2-door coupé made in small numbers by Zagato on the platform of the Delta HF Integrale. Fiat wanted no part in the limited production of the car and essentially finished cars had to be purchased, stripped and rebuilt, making the Hyena very expensive ($75,000 in 1992). A production run of 75 examples had initially been planned, but only 25 Hyenas were completed between 1992 and 1993. The Zagato bodywork made use of aluminum alloy and composite materials, while the interior featured a new dashboard, console and door panels made entirely from carbon fiber.

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By the time Lancia reached the 1990s, each of its models were closely related to Fiat models. The Dedra was created for the luxury sedan range. Launched in 1989, it enjoyed a production life of 11 years. The car was a success in Italy, but a sales disappointment in other markets. Over 400,000 were produced and although a favorite with Italians, it is a model that foretold the future of Lancia – a strong domestic acceptance with little recognition elsewhere. The successor to the original Delta, the "Nuova Delta" was introduced in 1993 and remained in production until 1999. It was targeted to buyers who were more interested in comfort and convenience. Despite front-wheel drive HF performance versions with up 190 hp, no four-wheel drive second generation Deltas were even produced.

Sharing its platform with the Alfa Romeo 166, the Kappa was introduced in 1995 as a replacement for the Thema in the executive car segment. Reviews were mixed; it was a good car, but was not class leading. The car’s somewhat bland exterior didn’t awe buyers. It stayed in production for only five years. At the end of that period, it was replaced by the Lancia Thesis. Only 117,000 Kappas were made, most cars were sold domestically.

At the end of the 90s, the Lancia Lybra was launched. Based on the Alfa Romeo 156 platform, the Lybra was designed as a compact executive car. Its styling was a clear departure from ‘rectangular’ shapes prevalent in 1980s and 1990s, but it was by no means as edgy as the Lancia Thesis. Production ended in 2005.

In 2002, Lancia returned to the executive car segment with the Thesis. The model was fitted with engines ranging between 2.0 and 3.2 liters, both naturally aspired and turbocharged. Even though the car was well-equipped, with trim levels aimed at a higher market, the car failed in foreign markets where it faced stiff competition from Audi, BMW and Mercedes. The Turin factory stopped making Thesis sedans in 2009. This was replaced in 2011 by a new flagship sedan, the rebranded Chrysler 300 sold as the Lancia Thema in Europe. Although a fine automobile, it was a case of badge engineering and not a true Lancia at all. It was the wrong car in the wrong market at the wrong time. Not surprising, sales were disappointing.

The Lancia Ypsilon supermini introduced in 1995, is at present, Lancia's sole product. Between 1995 and 2005, Lancia produced more than 870,000 Ypsilons in the Melfi plant in the Potenza region. As sales overseas declined, the decision was made to make the Ypsilon available only in the domestic Italian market.

The Future of Lancia

The Delta is out of production and the highly anticipated new Delta concept has failed to materialize. The Chrysler 300-based Thema was canceled after lackluster sales. Lancia’s lineup has been pared down to just the Ypsilon, which is admittedly getting long in the tooth.

So what about the future of the marque? FCA Chairman Marchionne owns a Delta HF Integrale and knows the impressive history the iconic Italian brand. The CEO stated, "We have to be honest. Lancia will never be what it once was. The only model that is of any value in Europe is the Ypsilon, which will be saved. The rest of the range has no appeal."

Once the Ypsilon reaches the end of its life-cycle, it is unclear whether Lancia will continue in any form. Recent attempts at selling rebadged Chrysler-models are the proof that it would take enormous sums of money to turn Lancia into a profitable business. Such an improvement is unlikely in the foreseeable future.

In management’s view at FCA, sacrificing Lancia is necessary to save Alfa Romeo and Maserati. In the past few years, these brands have expanded their reach in the U.S., one of the prime markets for the company’s upscale automobiles. The fact remains that in order to be profitable, FCA needs to sell cars in its global markets. After 25 years of absence, Fiat has had an uphill battle in the U.S. It did not only have to worry about the core of the Chrysler products, but it wanted to sell Fiats and Alfas here as well. The Lancia brand had become tarnished in numerous export markets during the 1990s and in this age of globalization, it is increasingly difficult to build a car for just one market. In today’s world, Lancia has become a square peg in a round hole.

The Realities of the Global Marketplace

I’m reminded of a story told of Bob Lutz, the former Executive Vice President of sales at BMW, former EVP at Ford, former Vice Chairman of Global Product Development at GM and former head of Chrysler Corporation's Global Product Development. While at Chrysler, one of his pet projects was the development of the Dodge Viper concept car and later its introduction as a production automobile. Lutz was congratulated by an automotive writer for the increase in sales of the Viper and was asked if that was part of the reason for Chrysler’s financial turnaround. Lutz quipped, “We drop more minivans off railway platforms.”

Volume – with few exceptions in the automotive world, it is about volume. Luxury brands have better profit margins, but with few exceptions, it is the lower priced cars that are the business backbone. The Viper may be the car that Chrysler executives wanted on the poster in a teenage boy’s room, but it was a minivan that they wanted his parents to buy. The same holds true for Fiat. At some point, a luxury brand can become an albatross. GM recognized this when it canceled the La Salle brand in 1940 because it diluted the Cadillac market share. GM shed first Oldsmobile (2004), then Pontiac, Saturn and Hummer in 2010, when it was on the verge of collapse.

Over the years, Fiat has acquired many automakers. Of the major brands it acquired, Lancia came on board in 1968. Fiat became a shareholder of Ferrari in 1969, took control of Alfa Romeo from the Italian government in 1986, purchased Maserati in 1993 and became the full owner of Chrysler Group LLC in 2014. The Fiat Group currently produces vehicles under twelve brands: Abarth, Alfa Romeo, Chrysler, Dodge, Ferrari, Fiat, Fiat Professional, Jeep, Lancia, Maserati, Ram Trucks and SRT. With so many brands, it is inevitable that change is necessary. Some of the company’s top executives have conceptualized modern versions of Lancia cars; those that have left their mark on history - the Delta Integrale and the Stratos, but a plan of action is far easier said than done. No one has managed to put together a sound and convincing business plan for any project. Some have suggested that Lancia be used as the ultra-luxury segment for FCA, a segment even higher than Maserati - something on the order of a Rolls Royce or Bentley. This is a market currently beyond FCA’s scope and would appear to be a pipedream at best. As storied as the marque is, it was never in that ultra-exclusive market segment.

“There’s no hope for Lancia right now,” Marchionne was quoted as saying during a press conference. “Our resources are limited and we need to make choices. Sometimes that’s painful.”

Sad and painful indeed.

Next week we’ll begin a multipart series on Maserati. Please send comments to Dave@ItalianTribune.com



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