It’s been a difficult week for Italian automotive enthusiasts, who have firstly seen Alfa Romeo’s future direction questioned by Fiat Group CEO Sergio Marchionne, and now suggestions the Lancia brand’s proposed revival could be scrapped in favour of rebadging Lancias as Chryslers in key European markets.

According to a report in Automotive News Europe this week, the Chrysler name could take over models currently badged as Lancias in Europe as early as 2011, while the Chrysler name is proposed to be promoted around the main global markets. “There is no doubt that, outside a limited number of markets in Europe, Chrysler is going to be the global brand,” Fiat-Chrysler CEO Sergio Marchionne told ANE late last month. Since Fiat took a 20 percent stake in Chrysler in the summer and assumed control of its future direction, plans have been laid to wrap the future fortunes of Chrysler and Lancia together. Lancia’s CEO Olivier Francois has been promoted to head the Chrysler brand while also retaining responsibility for the Italian name.

Marchionne believes that the Chrysler brand name is more recognised in global markets than Lancia, but he did hold out that the famous Italian automaker would survive in some form. Lancia celebrated the occasion of its 100th anniversary in 2006. “We need to be very careful that we don't destroy Lancia's roots, to find a way to preserve the identity of Lancia through an agreement that commonises as much of the portfolio as possible [with Chrysler],” Marchionne said.

In recent months, Lancia has been impressing in Italy, where it sells around 90 percent of production, with sales climbing sharply, topped by a 50 percent year-on-year rise in November – although this stunning recent run, that sees it now outselling sister Fiat Group Automobiles brand Alfa Romeo at home by a margin of more than 2:1, is partly as a result of LPG models that currently attract generous Italian state subsidies. It is less the case however on the other two key European markets where Lancia is exposed, France and Germany, which have seen it struggle to match recent market rises.

ANE speculates that Lancia could vanish from most European markets, except France, Belgium and Italy, or that it could become an upscale sub-brand badge in the way that Abarth has become for the Fiat brand. The pitfall of this strategy would be to lose the customer base that has remained loyal and continued to buy cars – despite, some would say, the best efforts of its management. The Chrysler brand has always suffered from a very poor perception in Europe, and the huge task that Fiat has set itself to push it upmarket in the U.S. could be even harder to pull off in Europe. Chrysler’s European sales have crashed to tiny numbers this year, and sustaining the viability of the brand until a full portfolio of all-new models arrive could be a very difficult task. Next year Chrysler will get a new version of its full-size 300 sedan, a project that was mostly completed under the last owners, along with facelifted versions of the mid-size Sebring sedan, and the Town & Country minivan (sold as the Voyager in Europe). These key introductions will allow Fiat to gauge if its plans for Chrysler can start to drag customers back into its showrooms. “We need to see product, we need to see positioning and based on that we can make a decision,” Marchionne said.

The newspapers adds that while Marchionne is still keeping an open mind about how to allow both brands to co-exist successfully, he further reiterated that brand rationalisation remains a key part of the Fiat-Chrysler future because it takes a huge amount of money to maintain a brand. This said, Dodge’s successful light truck division, which is synonymous with the historic name, has just been spun off to create a new brand that has been tagged with the ‘Ram’ name, increasing the list of nameplates and striking out in the opposite direction to GM, which is busy rationalising its many and often overlapping divisions. ANE reckons Fiat will decide on Lancia's fate by the end of next year.