After years of struggling to revive the ailing brand, Fiat/Chrysler CEO Sergio Marchionne appears ready to pull the Lancia brand off life support.
“The brand will be reduced or eliminated,” the executive revealed during a conference call discussing plans to improve the sagging fortunes of the entire Fiat Automotive Goup..
Even though the net profit of the Fiat Group in the third quarter came in at € 286, the maker’s debt increased to 6.7 billion. Lancia has been a significant part of Fiat’s woes in recent years, and Marchionne made clear that the focus has to be put on the group’s strongest brands, including Fiat, Alfa Romeo and Maserati.
Eliminating Lancia would not mean closing a plant in Italy, nevertheless the company’s shares saw a sharp decline on the stock market.
Marchionne expects the Fiat Group to not be able to reach break-even in Europe before 2016, because of the deep crisis in the Continental automobile market. He said the company has to regroup and to the surprise of many: “We have to be honest. Lancia will never be what is 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.”
Fiat has been struggling to come up with a strategy to save Lancia, even using the maker’s American arm to flesh out the Italian brand’s line-up. A number of Chrysler products, including the big 300 sedan, can now be found wearing Lancia badges.
And that raises questions about how Chrysler will now handle sales of those American-made models in Europe.
Lancia was founded in 1906 by Vincenzo Lancia. The brand became famous because of the technical quality and the refinement of the cars. The brand was taken over by Fiat in 1969 – but has struggled to gain traction for the last several decades.
“The goal,’ according to Marchionne, “is to build on the historical premium brands, Alfa Romeo and Maserati, to realign the product portfolio and to reposition its business for the future.”
He also said Fiat will start working with the Italian government on measures to improve the competitiveness of exports.
The maker’s bigger challenge is to improve the competitiveness of its core line-up. Its October sales continued to slip, according to preliminary reports, across Europe, dipping in the home Italian market by 10.3%.
By comparison, the Chrysler side of the company is on the mend, profits jumping 80% during the third quarter while October saw the U.S. maker achieve the 31st consecutive monthly sales gain, year-over-year.