Lancia Pulls Ahead in Europe’s Luxury-Vehicle Sales

PARIS – The European market was not kind to luxury marques in the year’s first nine months, with the exception of the Italians: Fiat Automobiles SpA’s Lancia and Alfa Romeo brands not only gained market share but also sold more units this year than last.

The record is all the more impressive when compared with Europe’s other premium brands, most of which fell by double digits, according to ACEA, the European auto makers’ association.

These include Mercedes-Benz, down 18.0%; BMW, -18.8%; Jaguar, -27.0%; Lexus -31.0%; and Land Rover, -34.4%.

The improvement at Alfa Romeo is technical. Last year, the factory at Pomigliano d'Arco was shut down for three months to be refurbished, so 2008 sales were depressed.

Nonetheless, the success of the Fiat Group must be encouraging to Chrysler Group LLC, especially because Lancia CEO Olivier Francois has been named to run the Chrysler brand, as well.

Lancia has only three models and two are getting old. The midsize Delta is new (2008), while the Ypsilon (2003) and Musa (2004) are based on Fiat’s old Punto platform 188.

“Lancia is a small-volume marque, and when a new model arrives, it makes a difference right away,” says Jean-Michel Prillieux, analyst at Mavel SA in France. “When Lancia launched the Delta, it didn’t cannibalize the other models.”

Chrysler to get Lancia Delta as platform for midsize hatchback.

Mavel predicts Lancia’s global sales this year will be near 150,000 units, up some 50%, because the marque is doing well in South America and Europe.

Francois is credited with using marketing to make a success of the brand, using celebrities such as actor Richard Gere and singer-French First Lady Carla Bruni.

Still, Lancia’s future has been in question for years. The range has been shrinking. The Lybra was dropped in 2006 without a replacement and the Thesis large car was eliminated this year.

The European press believes the naming of Francois to run Chrysler presages a close cooperation between the brands, with Lancia getting a version of the next Chrysler 300C to replace the Thesis, and Chrysler getting the Delta as a platform for a midsize hatchback.

Other press speculation ahead of Fiat CEO Sergio Marchionne’s scheduled announcement of product plans on Nov. 4 include Lancia using the Chrysler 200C as a basis for replacing the Lybra; Chrysler getting a version of the next Ypsilon small-car, shown only as a concept so far; and Lancia using the Sebring platform.

Prillieux says Chrysler will get a small car from Fiat in 2011, a B-segment car based on the Fiat Punto and a C-segment model based on the Lancia Delta/Fiat Bravo. Lancia and Alfa Romeo may well use the Chrysler 300C platform, he adds, but a large car is not a priority in the current climate.

Both Alfa Romeo and Lancia are rising from a small base. Through September, Lancia’s European sales were up 1.9% to 91,186, while Alfa Romeo’s rose 10.1% to 86,410. Lancia’s September deliveries climbed 16.5% and Alfa Romeo’s jumped 20.9% in a market up 6.3%.

Bonuses available in Italy for purchasing cars with low carbon-dioxide emissions are helping, with the Fiat group’s market share now at 30%.

A bank analyst in Italy, who prefers not to be named, says Fiat has profited well from the government support. Despite opposition from some European leaders, he expects a form of support to continue next year, as it will in France.

He also claims European investors have been driving up Fiat’s stock price because they believe the investment of time and technology in Chrysler will pay off.

Lancia and Alfa neighbors on Europe’s best-selling brands’ list are Hyundai, Dacia, Volkswagen and Fiat, all of which have gained customers during the recession.

The Fiat brand is being helped across Europe by its small cars, the Punto, Panda and iconic Fiat 500. All are what the public has been buying as a result of government “Cash for Clunkers” incentives in the major markets.

While Fiat, Volkswagen AG, Ford of Europe and Renault SA all have gained market share in the last nine months, only the Fiat group has gained sales outright.