BBC News
watch One-Minute World News
Last Updated: Tuesday, 4 March 2008, 20:20 GMT
New Lancia to boost Fiat global sales
By Jorn Madslien
Business reporter, BBC News

Lancia Delta
Fiat is hoping its new Lancia model will boost global sales

Italian carmaker Lancia is unveiling a new vehicle for the first time in four years at the Geneva motor show, as part of a plan to more than double sales to 300,000 cars by 2010.

By then, Lancia's parent company Fiat hopes the Delta model will account for almost a quarter of Lancia's global sales.

Italian drivers are expected to account for half the Delta's sales, though the model also marks Lancia's return to the UK, 14 years after it pulled out.

Lancia is expanding its dealer network to 450 locations outside Italy and 180 at home.

Premium brand?

Lancia 's rejuvenation, whilst far from certain, will receive a strong boost from the attractive and distinctive design of the Delta
Global Insight analyst Paul Newton

The marque will share the dealer network with fellow Fiat subsidiary Alfa Romeo, which is also eyeing a near doubling of sales to 300,000 cars by 2010 - in part boosted by models such as its limited edition 8C Spider, also on show in Geneva.

Last year, Alfa Romeo sold 165,000 cars, almost all of them in Europe.

But this is not enough to make a profit, according to analysts.

"Alfa's problem is that it sells too few cars," observes JP Morgan analyst Philippe Houchois.

Essentially, this is because "while it tries to pitch itself as a premium brand, it doesn't quite make it", adds Jonathan Pusket, an analyst at JD Power.

Italian reliance

The Delta will share a platform with, and will be produced shoulder to shoulder with its sister model, the Fiat Bravo, at the company's Cassino plant in southern Italy.

Fiat 500
In 2007 Fiat continued on its successful path towards a sustainable recovery
Falk Frey, automotive analyst, Moody's ratings agency

Analysts predict that customers will like its stylish, urban design.

"Lancia 's rejuvenation, whilst far from certain, will receive a strong boost from the attractive and distinctive design of the Delta," says Global Insight analyst Paul Newton.

Lancia's previous model, the Musa people carrier, was unveiled at the Geneva motor show in 2004.

At the time, Fiat was struggling and the future of the Lancia marque appeared uncertain.

In 2007, Lancia sold just 121,000 vehicles, which the company says should rise to150,000 sales this year, mostly to Italian customers.

The carmaker is eager to reduce its reliance on its home market.

Fast progress

In spite of the poor performance by Lancia and Alfa Romeo, Fiat Auto was bolstered by a sparkling year for sister brand Fiat.

Fiat has launched a strong of successful models recently, including the instantly successful 500, for which it took 160,000 orders in the last six months.

Fiat's unveiling of a sporty 500 model is expected to fuel demand further, and the company recently announced plans to raise production capacity to 190,000 cars per year.

Last year, Fiat Auto's profits topped 800m euros ($1.17bn; 594m), and thus helped boost Fiat Group's profits to a record 3.2bn euros.

"In 2007 Fiat continued on its successful path towards a sustainable recovery of its financial profile mainly driven by further operating improvements at Fiat Group Automobiles," observes Falk Frey, automotive analyst with the ratings agency Moody's.

VIDEO AND AUDIO NEWS
A look around the Geneva Motor Show



RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific