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Lancia/Chrysler’s future (corrected)

by David Zatz on

News Analysis (and correction to an earlier report):

When Fiat took over distribution of export Chrysler products from Daimler-Benz, the Chrysler brand was dropped in continental Europe, and the 200, 300, and Voyager were sold as Lancias.  Voyager was mainly unchanged, but 200 (Flavia) and 300 (Thema) were given new high-end interiors, resulting in a pricier product which does not appear to have done well in a tight market. The Dodge Journey, selling as the Fiat Freemont, was not “upscaled” and has been popular, nearly equalling sales of all Jeeps combined (Grand Cherokee, Wrangler, Compass, and Cherokee).

The change to Lancia did not seem to help Chrysler’s languishing sales in Europe, which had been on a downward trend for some time. In the first nine months of 2012, according to Automotive News Europe,  Chrysler accounted for very few sales indeed. In the UK, where both Lancias and Chryslers are sold as Chryslers, they sold 499 Voyagers and 254 300Cs, along with 1,776 Ypsilons and 626 Deltas. In the rest of Europe, they sold 71,190 Lancias, including 443 Flavias, 1,164 Themas, and 4,040 Voyagers. The entire Chrysler line, combined, posts around half the sales of Delta or Musa in Europe, and around a ninth the sales of Ypsilon.  (Voyager sales were far lower this year than in the first nine months of 2011, when 3,171 were sold in the UK.)

Jeep sales, on the other hand, were 21,498 for the first nine months (Europe including UK), a hefty improvement over last year, which can be largely credited to the Grand Cherokee’s doubling in sales. Compass gained as well, but only at the expense of Patriot; the two, combined, were roughly the same in both years (Patriot is no longer sold in Europe).

Lancia Thema

After months of low sales and two-to-three-figure Flavia and Thema production, Chrysler stopped reporting Lancia production (that is, production of Thema, Flavia, and Voyager) separately. Lancia’s English-language Web site has not had its news updated since March 2012.

Sergio Marchionne already announced that Lancia development would be slashed, but most believe he simply meant that they would rely on Chrysler for vehicle development, with a new Flavia sedan and convertible due soon, along with the Chrysler 100 which is more tuned to the European mass market.

Automotive News reported that Chrysler sales in Europe fell from 12,445 in 2009 to 10,506 in 2010 to 4,595 in 2011. Lancia sales, meanwhile, went from 121,846 in 2009 to 99,671 in 2010 to 98,632 in 2011. Chrysler as a standalone brand does not appear to be logical in Europe, especially with the dealer situation, until one looks at the other side:  around 80% of all Lancia sales are in a single country, Italy. In some countries, Lancia and Chrysler might be far more evenly balanced.

On June 2, 2010, dealer agreements for all Chrysler brands and Lancia  in Europe were cancelled; both types of dealerships were invited to apply for the new Lancia-Jeep franchise, either as full dealerships, or service-only franchises which can do authorized warranty work but not sales.  The costs of rebranding the dealerships would be a major impediment to switching brands.

There is another solution: Alfa Romeo, which Sergio Marchionne has already indicated is to gain the company’s attention and emphasis. Neglected in the past, Alfa Romeo could not only share with Dodge (as appears to be the case for their upcoming rear wheel drive mid-sized car) but possibly with Chrysler. Likewise, Chrysler could supply Fiat with more than the Journey; and Jeep is already believed to be getting at least one Europe-only product. Lancia could still be retained, but not as the exclusive purveyor of imported Chryslers.

Lancia may have been damaged by newspapers mis-reporting Sergio Marchionne’s statements last month; changing from “less separate development” to “Lancia was shut down” may become a self-fulfilling error, unless new Lancias convince the public otherwise.

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