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Lancia passes Fiat ownership landmark but no celebration for storied brand
ANDREA MALAN
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MILAN -- This year marks a significant anniversary for Lancia: The storied Italian brand was bought by Fiat 50 years ago.
No celebration will take place at Fiat Chrysler Automobiles, though, as Lancia has now shrunk to a single nameplate: the Ypsilon small hatchback, sold only in its home market of Italy.
Lancia has virtually disappeared from FCA’s strategy since an aborted attempt to relaunch it after the 2009 Fiat-Chrysler merger.
In 2010, FCA management decided that Lancia would be merged with Chrysler in Europe. U.S.-made Chryslers would be rebadged as Lancias to beef up the product range, while some Lancias would be sold as Chryslers in the UK where Chrysler had better brand recognition.
The Chrysler 300 sedan was renamed in Europe as the Lancia Thema and the Chrysler Voyager minivan sold as a Lancia.
The Lancia-Chrysler combination aimed at reaching 295,000 European unit sales by 2014. The plan failed. Total sales by the two brands in Europe fell to 74,313 in 2014 from 112,000 in 2010, with Lancia down to 71,765 from 99,000.
As a result, Lancia disappeared from FCA plans altogether. Neither the 2014-18 business plan nor the current five-year plan presented in June 2018 made any mention of the brand.
"We realized the Lancia brand has no appeal outside of Italy," then-FCA CEO Sergio Marchionne said in July 2014. "It has no heritage neither in Europe nor in the U.S."
But Marchionne's plan stopped short of killing Lancia altogether and the brand has showed a resilience in its home market despite offering only the 8-year-old Ypsilon.
Lancia sold more cars in Italy in the first nine months than Alfa Romeo sold in the whole of the European Union, according to industry association ACEA. Lancia's Italian sales rose 29 percent to 45,783 through September, while Alfa Romeo's EU sales fell 42 percent to 39,114.
How can Lancia still command a 0.4 percent share of the EU market with only a single aging model sold in just one country?
“The Lancia brand still enjoys a wide recognition in Italy, and the Ypsilon has always been a popular model in the country,” said Felipe Munoz, a global automotive analyst JATO Dynamics. “Moreover, the small-car segment is still popular in Italy, and the Ypsilon is the only small hatchback FCA still sells in Italy after the Punto was discontinued in 2018.”
The past popularity of the Ypsilon also represents a reservoir of potential buyers, given the huge and quite loyal customer base. The car has been on sale for nearly 25 years in Italy, first as the Y and then the Ypsilon, with similar body styles although on different platforms. The car used to be made on the Fiat Punto platform until 2011, and it currently shares one with the Panda.
Over this time span, Lancia sold 1.6 million Y and Ypsilon cars in Italy.
Lancia nurtures interest in the Ypsilon, its only model, with editions based on fashion themes. Lancia boss Antonella Bruno is pictured with the latest special edition called Ypsilon Monogram.
Women buyers
From a marketing perspective, a couple of figures stand out.
First -- 75 percent of the current customers are women, according to FCA. The Ypsilon plays on a more stylish exterior than the Panda minicar and somehow works as a four-door version of the two-door Fiat 500.
Lancia has been nurturing Italian women's interest in the Ypsilon with special editions based on fashion themes. It even uses the words "Ypsilon Collections" mimicking fashion industry terminology.
Style is the most important factor behind the decision to buy an Ypsilon, the brand's head, Antonella Bruno, said at the Oct. 10 launch of the latest Ypsilon special edition called the Monogram. The car turns the letter "Y" into a monogram featured around the car including on the alloy wheel centers, B-pillars, and rear screen, as well as on the headrests.
Second -- the version of the Ypsilon powered by liquefied petroleum gas has accounted for 30 percent of the car’s total sales so far this year and was the third-most-popular LPG-powered car in Italy after the Dacia Duster small SUV and Fiat Panda minicar. Through September, sales of LPG-powered cars in Italy are up 11 percent to 106,820.
Some sales channels may help sustain the registration level of the Ypsilon. Figures from Dataforce market analysts show that through September, more than 55 percent of Ypsilon registrations were in the last three days of each month, 13 percent above the market average. End-of-month sales are considered a proxy for self-registrations by dealers and carmakers.
Is the car profitable? FCA does not reveal profitability by nameplate. “Even if it’s not very profitable,” said Munoz of JATO Dynamics, “the Ypsilon is quite cheap to produce, as it’s based on the same platform of the Fiat 500 and Panda, and it’s made in Poland alongside the Fiat 500.” Consequently, the Ypsilon is cheaper to make than the Italian-made Panda. And after eight years, the tooling and production line are largely amortized.
How long will FCA keep the Ypsilon on the market? “I see no reason why FCA should discontinue the Ypsilon, as the Italian market leader has to be present in one of the largest segments of the Italian market,” Munoz said.
Moreover, he said, FCA’s traditional strategy is to keep models on the market for a long time. The Ypsilon is 8 years old but still much younger than the Fiat 500, which has been on sale since 2007.
“I believe FCA will keep the Ypsilon on the market for at least two years,” Munoz said.
Lancia sales will get a boost next year when the Ypsilon will get a fuel efficient mild-hybrid gasoline engine.
According to the 2018 FCA annual report, the automaker’s a hybridized version of the three-cylinder, 1.0-liter gasoline engine will replace the current four-cylinder 1.2-liter engine with 68 hp. The three-cylinder is a less powerful version of the 1.0-liter turbo engine currently used on the Fiat 500X and Jeep Renegade small crossovers.
Should we expect new Lancia models? “For FCA, it doesn’t make much sense to invest on a brand like Lancia,” Munoz said. “Lancia has never been recognized outside Italy. Its appeal has always been much lower compared to Alfa Romeo.”
Lancia's cars pictured during the brand's 90th anniversary in 1996.
Tech firsts and rally success
Lancia was founded in 1906 by pilot, engineer and race-car driver Vincenzo Lancia in Turin, Italy.
Its first car went into production in 1907. This was the Tipo 51 or 12 HP (later called Alfa). It had a small four-cylinder engine with a power output of 28 hp.
Lancia introduced various technical innovations in production cars, such as the first unibody chassis in the Lambda in 1922 and the the first five-speed transmission in the Ardea in 1948.
When Vincenzo Lancia died in 1937, his son Gianni took over. In the 1950s Lancia had a short and unlucky stint in Formula One racing. The brand took part in the 1954 and 1955 championships with the D50, but quit in May 1955 after its top pilot and past world champion Alberto Ascari died testing a Ferrari on the Monza circuit.
The F1 adventure weighed on the balance sheet. Despite launching such iconic cars as the Aurelia coupe and spider, and the Flaminia luxury sedan and coupe, Lancia losses piled up and Gianni Lancia sold the company to the Pesenti family in 1956.
The Pesentis started a successful involvement in rally racing with the Fulvia Coupe, but they decided to sell Lancia to Fiat in 1969 because they did not have the resources to pay for the investments needed to keep up with the growing competition.
Lancia's involvement in top-level rallying lasted until 1992. It won fifteen World Rally Championship titles with cars such as Fulvia Coupe in the 1960s, Stratos in the 1970s and the Delta between 1980s and 1990s.
Cars such as the Delta S4 brought Lancia rallying success.
By the time Lancia's production as part of Fiat peaked at 178,674 units in 1997, the Y, the Ypsilion predecessor, was already the most popular model and was selling far more than its more well known models of the 1980s and 1990s -- the Delta compact hatchback and Thema luxury sedan.
In 1997 the Delta was on its way out, while Thema had been discontinued and replaced by K, another premium sedan.
Lancia production in Italy stopped in 2014. The current Ypsilon is made in Fiat's plant in Tychy, Poland.
Lancia festeggia (per modo di dire) i 50 anni sotto l’egida Fiat.
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