Is FIAT going to Kill Lancia?

[Scott H]

The title say it all.

Linky (http://www.leftlanenews.com/fiat-planning-to-ax-lancia.html#more-18107)

Sad if this comes true but also not entirely unexpected.

>Scott


Fiat planning to ax Lancia? (http://www.leftlanenews.com/fiat-planning-to-ax-lancia.html)

05/19/2009, 1:53 PM

By Drew Johnson

Italy’s Fiat has already expanded its auto (http://www.leftlanenews.com/fiat-planning-to-ax-lancia.html#) empire to include Chrysler (http://www.leftlanenews.com/chrysler.htm) – with Opel likely to join in the coming months – but a new report reveals Fiat’s lineup expansion could stamp out at least one of its existing brands.

According to a recent Reuters report, a Fiat-Opel merger would likely spell the end for Fiat’s Lancia premium brand. Fiat CEO Sergio Marchionne has reportedly told those close with the Opel merger talks that the three-way merger of Fiat, Chryslerhttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.leftlanenews.com/fiat-planning-to-ax-lancia.html#) and Opel would mean the ousting of the Lancia brand.
Lancia is by no means Fiat’s most successful brand, selling a mere 100,000 units last year – roughly the same General Motors’ Saab (http://www.leftlanenews.com/saab.htm) brand. However, Alessandro Alexandre, head of Lancia’s dealer association says the reports of Lancia’s demise are “nonsense”.
But with Fiat’s expansion plans, there may not be room in the Fiat stable for Lancia. As General Motors has discovered with its multiple brands, resources for r&d and marketing become all too thin, especially for a division that offers essentially nothing but re-badged vehicles (http://www.leftlanenews.com/fiat-planning-to-ax-lancia.html#).

[1,6 HF]

Lancia may not be Fiat's most successful brand, but in 2008 it outsold Alfa in Europe. Lancia occupies the moderate luxury niche for Fiat; it would be like Toyota killing Lexus, because they don't sell as many of them as Toyotas. It's not impossible, but it's far from an obvious move--particularly if Saab's future is in question, thereby possibly opening up more market share in that niche.

[Scott H]

The difficulty is when it takes + $1 Billion to develop a platform and then you only sell a few each year. That report says that total Lancia annual sales were 100k.

I can assure you that your Toyota/Lexus analogy is way off.

>Scott

[rossocorsa]

the press are always taking a negative about lancia the italian public still seem to love the brand and in terms of economies they are not built on unique platforms however it would not be a great loss given the uninspiring cars they make at the moment

[1,6 HF]

Here are the actual numbers: In 2008, Lancia had their worst year since 2003, but still posted total European sales of 114,167. The Ypsilon sold 61,655 units, its highest total ever. The Musa sold 33,840; the new Delta sold 14,005; the Phedra sold 4,068; and the luxury Thesis sold only 583.

For the first time since 1998, Lancia outsold Alfa in Europe. Alfa only sold 102,635 units total–its lowest since 1997. The new MiTo sold 13,296; the 147 sold 34,361 units (down from a high of 92,459 in 2002). The 159 sold 42,536 units (down from best year of 2000 with 97,826). The Brera, Spider, and GT sold in very small numbers: the Brera sold 3,069; Spider sold 2,537; GT sold 6,508.

Scott assures me that my Toyota/Lexus analogy is "way off", so let's do Honda/Acura instead. For 2008, Acura sold a total of 144,504 worldwide. (the TL sold 46,766, MDX 45,377, TSX 31,998, RDX 15,845, RL 4,517, and RSX 1). In other words Lancia's Ypsilon nameplate outsold the best-selling Acura model by 50%. 114,000 units isn't ridiculous for a niche mid-luxury brand.

And for Scott, here's Lexus:

Global sales, 2008 total passenger cars & SUVs
Japan - 20,000
Europe - 45,000
North America - 270,000
Other regions - 95,000
Total - 430,000

U.S. sales, 2008 total passenger vehicles
IS250/350 - 49,432
ES350 - 64,135
GS350/460/450h - 15,759
SC430 - 1,986
LS460/600h L - 20,255
Total Cars - 151,567

The US is far and away Lexus' biggest market, and the best-selling passenger car model in the US sold 64,135 units--just 4% more than the 61,655 Ypsilons that Lancia sold in Europe. Even if you extrapolate worldwide, the Lexus model figures are aren't exactly an order of magnitude greater than Lancia.

[Charley]

Never fear,Obama will save Lancia. :rolleyes: Here is why.....a Musa sales poster from Italy.
http://tinyurl.com/olqyjt

[Scott H]

Ed,

I am not wanting this to be a pissing match but I find your comparison of FIAT killing Lancia as being the same as Toyota axing Lexus absurd. Here is MY opinion. I will give you that it is an extremely biased opinion :D but don't believe for a second I am trying to bash FIAT or Lancia. There is already way too much pain in the auto industry :'(. All I am saying is the market placement of Lancia and its contribution to FIAT is far enough from that of Toyota/Lexus that I find your comparison lacking :scratch:. I would truly hate to see Lancia go away.
After all, it is the only vehicle I own :eek:.

The long version.

I said your comparison is wrong is because of two things. Lexus and Acura both enjoy a high retail price, much higher than Lancia. Just see the ad above. Hell, using current conversions it is priced significantly below ($16k US) the most basic Camry (~$20K). Sure the top of Lancia's pricing gets you in the neighborhood of some of the entry level luxury Japanese it is still a long way off from the $50k, $60, $80, and in an extreme case +$120k that is the reality of real luxury cars. Lancia is not in that game and not even in the ballpark. They are used as taxis.

Second is that development costs of luxury brands gets spread out among the millions of their mass-market cousins. It allows a two-way sharing. Costs of commodity level parts are lower for all vehicles but especially the lower volume luxury vehicles while the mass-market brand gets true high-end options that are tried and now lower cost and funded by the higher MSRP. Sure, FIAT gets to do that but they don't have the same volume as Toyota nor does Lancia have the revenue with their lower sticker price. FIAT also does not have the supplier equity relationship where the TM reaps profits from these commodity level vendors and luxury component suppliers.


These two factors together make the luxury divisions a very viable business. Neither of your Japanese examples are selling cars 20% below the Camry or Accord and their revenues reflect that.

I will also add that the way you state those sales numbers that they are technically *correct* but factually wrong. The Japanese luxury market is not as simple as you make it out to be. Both Acura and Lexus were started primarily as US brands. Cars you buy here under these names are sold in other markets as Hondas and Toyotas respectively. The only difference in many cases is literally the badge on the hood and the name on the back. Some of this is changing slowly as some new cars are released under their luxury brands but there are still large numbers of examples of a Lexus here is a Toyota there. You did not include these.

When you state the sales numbers, yes they are correct. But if you are trying to get a measure of the financial impact a group of specific vehicles are having on their automaker, you need to include all of the sales numbers for these exactly-the-same vehicles. You did not state sales of Lancias sold only in Italy but in effect you did that to Lexus 8).


Scott

[1,6 HF]

...I said your comparison is wrong is because of two things. Lexus and Acura both enjoy a high retail price, much higher than Lancia. Just see the ad above. Hell, using current conversions it is priced significantly below ($16k US) the most basic Camry (~$20K). Sure the top of Lancia's pricing gets you in the neighborhood of some of the entry level luxury Japanese it is still a long way off from the $50k, $60, $80, and in an extreme case +$120k that is the reality of real luxury cars. Lancia is not in that game and not even in the ballpark. They are used as taxis....

If there's a $120k MSRP Lexus, I sure can't find it in any of their sales literature. Their MSRPs do get to $80k for the top-of-the-line SUV, but the passenger cars start just over $31k and seem to top out in the mid-$60s (plus options, of course). Lancia discontinued the Thesis in 2008, but the various versions had MSRPs ranging from the mid-$50k to about $68k. Other than the smallest-engined econo versions, the Nuova Delta is priced in the mid-$30s to just over $40k. But a direct price comparison completely misses the point; it ignores the fact that Lancia focusses on the upmarket small car market, whereas, as you correctly state, Lexus aims more squarely at the US, where luxury small car is largely considered an oxymoron.

...I will also add that the way you state those sales numbers that they are technically *correct* but factually wrong. The Japanese luxury market is not as simple as you make it out to be. Both Acura and Lexus were started primarily as US brands. Cars you buy here under these names are sold in other markets as Hondas and Toyotas respectively. The only difference in many cases is literally the badge on the hood and the name on the back. Some of this is changing slowly as some new cars are released under their luxury brands but there are still large numbers of examples of a Lexus here is a Toyota there. You did not include these...

I have no way to evaluate this assertion. I used the official production figures that Lexus reported, and I assume that they're for the total production of their models, however they may be baded in various markets. This may be incorrect, but I'd be interested to know how you're so certain that they're reporting only those units badged as Lexus.

_____

But this is to focus only on prices and production, and it's to take the analogy too literally. Lexus was started as a way to sell higher-equipped Toyotas in the US for a higher price point than anyone would have been willing to pay for a Toyota. (And Lexus is really mid-luxury; the idea that they're in the "real luxury" market is a real overstatement.) In this, though, they've been successful--so successful at establishing a separate brand identity that Toyota still couldn't get the prices for a Toyota that they get for the equivalent Lexus.

Obviously, Fiat didn't invent Lancia for marketing purposes. Lancia was a well-established upmarket brand by the time Fiat acquired it. But it serves a similar market positioning purpose. Whether or not it falls exactly into the same price range as Lexus, Lancia allows Fiat Group to sell into a market segment that would be harder for Fiat itself to compete in. That was the point of my analogy, and I'll stand by it.

[Scott H]

If there's a $120k MSRP Lexus, I sure can't find it in any of their sales literature. Their MSRPs do get to $80k for the top-of-the-line SUV, but the passenger cars start just over $31k and seem to top out in the mid-$60s (plus options, of course).

The LS600h has a base price of $106k and there are 2 option packages. Every one I have seen has one package. A large number have both. This brings it to $122k. I have never seen any Lexus with no options.


Lexus aims more squarely at the US, where luxury small car is largely considered an oxymoron.

Teh (sic) Messiah is going to fix that.


I have no way to evaluate this assertion. I used the official production figures that Lexus reported, and I assume that they're for the total production of their models, however they may be badged in various markets. This may be incorrect, but I'd be interested to know how you're so certain that they're reporting only those units badged as Lexus.


Why would something sold as a Toyota be recorded as a Lexus :rolleyes:?? But, to answer your question, I see reports that show the specifics.

What this really comes down to is a co. has a primary job to return a profit to the owners. Nothing more, nothing less. Some have evolved into health care/retirement companies that build cars to fund that mission...

Do you think if Oldsmobile, Pontiac, Saturn, Hummer, and Plymouth were making tons of money for their owners they would be on the chopping block? Your points above are all valid but it really comes down to money. Do you think if Lancia was making piles of profits for the Agnellis they would consider killing it? That is the part of your original comment that I disagree with. I really hope it does not happen.

I find it really sad as these different brands are dropping off. Not all of them are my thing but I really hate seeing the death of some long standing names. OK, I really never got the Hummer *compensation* thing at all so that one can die :D.

>Scott

[1,6 HF]

The LS600h has a base price of $106k and there are 2 option packages. Every one I have seen has one package. A large number have both. This brings it to $122k. I have never seen any Lexus with no options.

Well, you got me there--I hadn't checked the hybrid pricing. I won't even ask how "green" a car it really is, nor how long it takes for any improved fuel mileage to catch up with a base MSRP $43k higher than the next highest LS version.

In any case, my only point is this: Lancia plays in a market segment that is significant for Fiat Group, and I cannot see which of their other brands they could reposition to fill the gap if they kill Lancia. Certainly their platform-sharing opportunites pale by comparison to Toyota/Lexus but then whose don't? We can shift the analogy to Honda/Acura if you prefer a comparison of companies a bit closer in scale. But by European standards Fiat seems to be as good as anyone at maintaining platform rationalization (which is a largely why the Lancia Thesis was discontinued--it didn't share its platform with anything else).

On a more positive note, having publicly announced that it would close down an Opel engine facilitie in Germany, Fiat is finding itself at a political disadvantage against the other two bidders for Opel. And Lancia was primarily under threat of sacrifice in connection with an Opel buy-out. So, with any luck, and with the intervention of German industrial protectionism, this whole thing may (hopefully) be moot.

[OperaHawk]

If you check the news (and my post about this), the CEO of Lancia has just been made ALSO the CEO of Chrysler. The goal is to integrate these two brands and make Chrysler 'more upscale than Cadillac.'

So Lancia's not going away, not at all.

SBJ

[John Allen]

Have you seen a Chrysler lately? Do you know their reputation held by most here in the US?

Lancia is toast if they think aligning it with Chrysler is a good idea.... 'more upscale than a Cadilac', give me a break! (I don't know haw to put the animated laughing icons in, nor is there enough room for them).

-John

If you check the news (and my post about this), the CEO of Lancia has just been made ALSO the CEO of Chrysler. The goal is to integrate these two brands and make Chrysler 'more upscale than Cadillac.'

So Lancia's not going away, not at all.

SBJ

[John O]

...the CEO of Lancia has just been made ALSO the CEO of Chrysler. The goal is to integrate these two brands and make Chrysler 'more upscale than Cadillac.'

I think I'm with John A. on this. It sounds as if Fiat already has mis-judged the American market ...again! It took many years for Cadilac to recover their reputation, but even before that they had a cultural memory/perception to stand on. Chrylser has zip right now. Instead of dreaming of some far off dubiously attainable future, they need to get some cars on the showroom floor and get them out the door. I don't see it happening. More, I see this ending badly for both Chrylser and Fiat.

John O.

[John Allen]

hmmmm..... Italians mis-judge the American market....... Chrysler...... Italians..... anyone remember the Chrysler TC that Maserati helped with?? (aka Chryserati??) You can't GIVE them away, nor use them in 'cash for clunkers'!!

I REALLY hope they are a success here. If they are, it will be because they come out with versions of THEIR cars, not 'updated' versions of ours. I also hope they kill the current divisions and start new ones in their places each with their own, new identities.

[OperaHawk]

I dunno. The Big Parmeseano has kept a lot of the right people to lead the Chrysler/Lancia division (read: those who had nothing to do with the Daimler fiasco) and would carefully bring in the cars people WANT.

Chrysler (as a whole) has always had the image problem of the 'red-headed stepchild' in most of the US mindset, and has been trying to recapture the heyday of the late 60s and early 70s, where they went toe to toe with whatever Ford and GM could dish out. That's part of Chrysler's problem - they've had a lot of successes between then and now and they tend to forget them. The k-cars were crude and rough (I loved my Shelby Lancer), but they kept the company afloat. The Onmi/Horizon (especially in Shelby modes) worked well. The minivan was CREATED by Chrysler, and the current version has been lauded by the automotive press. The Neon should have been updated and continued, instead of being axed for the butt-ugly Caliber. The new Ram is considered the best pickup ever made. For some reason, the regular press has shot down Chrysler at every chance, even though the current product is on par with their asian counterparts (now the 'standard' for automotive excellence).

It is going to be a hard row to hoe, but I think with some innovative ideas (like the 'cab-forward' sedans), Chrysler could come out of this in good shape. It'll still be #3-4 in the US ratings (unless GM really tanks), but for a company that wants to appeal to a particular group of people and not just to Joe Six-pack, much like what Mazda does, that's not a bad place to be.

My $.02.

SBJ

[John O]

The minivan was CREATED by Chrysler...

A little aside:
I've always had a problem with this crown that Chrysler made for itself. Volkwagen created the minivan; Chrysler updated it. Period. My grandmother owned three VW Busses throughout her life. Friends of mine had them in high school and we went everywhere in them. They were inexpensive to buy and operate, and in a weird kinda way, fun.

John O.

[John Allen]

Correct, Chrysler may have 'reinvented' it or made it more mainstream for the masses. What about the vans that FIAT and Austin had? Those were pretty 'mini' if you ask me! Not to mention the Corvair van......

I would also reconsider the remark about the 'Daimler fiasco'... All of the current models that are considered 'good' or 'innovative' have Daimler influences or designs. The 300 wouldn't be possible without the drivetrain/rear suspension developed by Daimler. What about the Crossfire? It was little more than a rebodied Mercedes, it may not have appealed to everyone, but it was a pretty nice/different car.

Without the Daimler influence, all of the cars would still be front drive and share common platforms like they did a few years earlier. I think I would rather have the Daimler guys than the guys who gave us the cars of a decade or two ago.

A little aside:
I've always had a problem with this crown that Chrysler made for itself. Volkwagen created the minivan; Chrysler updated it. Period. My grandmother owned three VW Busses throughout her life. Friends of mine had them in high school and we went everywhere in them. They were inexpensive to buy and operate, and in a weird kinda way, fun.

John O.