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Fiat's Lancia hopes new Delta to help meet targets

TURIN, Italy, June 4 (Reuters) - Italy’s Lancia will roll out this month a new version of the Delta, a car once known for its dominance of world rally championships, as it strives to achieve ambitious targets set for the end of the decade.

Fiat's FIA.MI premium brand hopes the Delta -- a cross between a sedan and a station wagon -- will boost its profile and help more than double total sales to 300,000 units by 2010.

As it has done with other models, Lancia will use a celebrity to promote it: Richard Gere. And the television spot in which the U.S. actor appears will likely further raise the brand’s profile, given the sensitive issue it addresses.

The spot, shown at a news conference on Wednesday at the Venaria Reale, a palace once owned by the Savoy royal family near this northern city, has him travelling from Hollywood to Tibet, whose autonomy from China Gere supports.

Tibet has become a focal point for protests against China as the country prepares to host the Olympic Games this summer.

Asked about the message that could be read in the spot, Fiat Chief Executive Sergio Marchionne said it reflected the group’s way of expressing opinions different from the others.

“I obviously like it,” he said.


With a price tag of 21,000 euros to 31,000 euros, the Delta will go on sale on June 21, marking Lancia’s entry into a new segment. “We knew that we had a line-up that was not balanced: between the small and the big models there was a hole to fill,” Lancia Chief Executive Olivier Francois told reporters.

The Delta comes at a time of fierce competition in a market where car makers are facing higher costs and weaker sales.

France's Renault RENA.PA and Peugeot Citroen PEUP.PA are introducing new models, some of which will compete with the Delta such as the Laguna and the Citroen C5.

Francois said he aimed to sell 20,000 units this year and 70,000 every year afterwards. He also stuck to a sales target of a total of 150,000 this year against 123,000 in 2007.

But the market has been tough, especially in Italy where Lancia gets the bulk of its sales. In April, new sales for Lancia cars in Italy fell 10.89 percent as its home market shrank for the fifth month in a row.

Marchionne was convinced the market would remain uncertain for rest of year. But he hoped the decline in Italy and Spain would be offset by better performance elsehwere in Europe.

The smallest of Fiat’s three brands, Lancia had been slowly increasing its sales with a heavy marketing campaign and an expansion of its dealer network across Europe.

It expects sales to grow outside Italy by 79 percent in 2008.

The Delta’s name evokes the world rally championships that an earlier version of the model dominated two decades ago.

But it is the only thing that it has in common with the first version that came out in 1979. In contrast with the boxy hatchback that was made to race down the backwood roads of a rally, the new one is longer, sleeker and definitely more urban.

Lancia spent nearly 300 million euros and more than 15 months developing the new Delta.

As part of Fiat’s strategy to cut costs, it was built on a platform similar to the one used by the Bravo, a mid-sized car launched last year under the Fiat brand.

Lancia’s market share in Italy is less than 5 percent but it has wider profit margins than Fiat’s mass-market cars. (Writing by Gilles Castonguay; Editing by Gary Hill)