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Fiat targets annual sales of 300,000 for Lancia luxury line

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Fiat SpA unveiled a new luxury car Tuesday that the automaker hopes will help double sales of its premium Lancia line by the end of 2010 _ part of CEO Sergio Marchionne's strategy to secure the turnaround of the Italian automaker best known for its compact models.

The Lancia Delta HPE, a five-door featuring a chrome grill and smoked glass roof, will be the line's entry into the sedan and station wagon segments. Until recently a concept car, it will be launched by the second quarter of 2008, after the final design is complete, and will complement the redesign of Lancia's best-selling Ypsilon compact.

The new Ypsilon, unveiled in Venice on Monday, goes on sale immediately.

Marchionne's targets are ambitious. The Lancia brand currently sells 120,000 cars a year in Italy and just 25,000 abroad _ representing eight per cent of the Italian market and one per cent of the European market. His goal is to sell 150,000 domestically and 150,000 abroad annually within 3{ years.

``The Lancia market share in Italy is valuable both in terms of volume and financial results, but is not yet sufficient to guarantee the future of the brand,'' Marchionne said.

``(But) I'm fully convinced that our target of 300,000 is not only feasible, I also know our team is betting all it has on the success of this project.''

Fiat moved to revamp its luxury models only after stabilizing the core Fiat brand, which accounts for 80 per cent of the automaker's sales.

Marchionne took the helm of the struggling automaker in June 2004, returning it to profitability in 2005, largely on the success of the Fiat Grande Punto compact. Two key Fiat brand launches are planned for 2007: the new Fiat Bravo sedan to replace the Stile and the new Fiat 500 compact.

Before targeting Lancia, Marchionne first took aim at the sportier Alfa Romeo line, introducing the new Spider, Alfa 159 and the Brera.

The CEO also has set a target of 300,000 annual sales for Alfa Romeo by 2010 _ with both the Lancia and Alfa lines contributing four per cent to the company's bottom line.

The strategy to boost Lancia sales includes plans to join sales points of the elegant Lancia with the sportier Alfa Romeo, said Lancia brand manager Olivier Francois.

The lines also will be paired in other markets where the Lancia will be launched, namely the Russian and Scandinavian markets by 2007 and the United Kingdom and Japan in 2008.

Fiat's strategy will be slightly different in the United States, where Marchionne plans to relaunch Alpha Romeo in 2008-2009, piggybacking on the Maserati brand, which is already sold in the U.S.

In Europe, the Ypsilon accounts for 65 per cent of Lancia sales, and the revamped model is an attempt to capture new markets. Already successful with women, Lancia is seeking to win men and younger drivers by offering the compact with five different engines _ four of them new.

Francois said Lancia wants to expand its mix to lessen its dependence on the Ypsilon, ``which is risky especially because it is in the area where we have the most competition.''

In remodelling the century-old Lancia line, Fiat is emphasizing its rich history as an icon of Italian style. It timed the announcements for the 63rd Venice Film Festival, where arriving stars and directors were chauffeured to the red carpet in Lancia Thesis sedans and Phedra vans.

Marchionne said he was advised to close the Lancia brand when he took over Fiat Auto, but decided against it in part because that would have meant plant closings at a time when Fiat had just come through a contentious period with its unions.

``To drop it would have been perhaps foolish. Lancia has a position in the Italian market that is enviable and we have nothing else in the Italian market that occupies that niche,'' Marchionne said.

``Either we play our trump card in the best way, or we could have closed shop two years ago.''

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Fiat targets annual sales of 300,000 for Lancia luxury line
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