Chrysler and Lancia brand CEO Olivier François has confirmed that after a change of plan, Chrysler has no plans to sell B- or C-segment vehicles in North America.

Chrysler had toyed with the idea of bringing the new fourth-generation Lancia Ypsilon to North America to be badged as a Chrysler. The company has already announced that from September, the new Ypsilon will be sold wearing its badges in the UK and Ireland – the two European markets where the Chrysler name is being retained after its withdrawal from the mainland continent. The new Ypsilon, which is based on Fiat’s ‘Mini’ architecture (Fiat 500/Panda) and features five doors for the first time, debuted at the 81st Geneva Motor Show last month and will hit Italian showrooms in May.

However, in an interview with Car & Driver magazine at the New York International Auto Show this week, François revealed that the Ypsilon now won’t be coming to North American markets. François told the magazine he believes that the Ypsilon is too close to the just-launched Fiat 500. In offering the Ypsilon, Chrysler would be pushing its brand straight into a difficult segment where niche models find it hard to achieve substantial volumes and be profitable. In B-segment, the Ypsilon would have faced competition from the Ford Fiesta, Honda Fit/Jazz, the new Chevrolet Sonic, Toyota Yaris and the Fiat 500’s avowed niche target, the BMW-built MINI.

The cancelling of plans to bring the Ypsilon Stateside strikes one entry from the 2010-2014 Business Plan for the Chrysler brand, as a new Fiat-derived B-segment small car was firmly pencilled in for North America “from 2013”. Furthermore, another cross is marked against the brand’s projected C-segment sedan, which will now be produced solely under the Dodge nameplate.  Key contenders in the ‘compact’ class (C-segment) in the U.S. include the Chevrolet Cruze, Ford Focus, VW Golf, Nissan Versa, Honda Civic, Toyota Corolla, Mazda2 and Hyundai Elantra.

The news about the C-segment cancellation also rules out any talk about the current-generation Delta coming to the U.S. – the furtherest it will go wearing the Chrysler emblem is the British Isles later this year. The current Delta, which was displayed as a ‘Chrysler’ showcar at the 2010 Detroit Motor Show to largely indifferent reaction, is pegged to continue in Europe until 2013. According to the Fiat Group’s 2010-2014 Business Plan unveiled last April, the replacement for the Delta hatchback is due in 2012. However, auto industry observers generally take most Fiat presentations with a large grain of salt, with swathes of models either never appearing or popping up far after their launch targets – and without the likelihood of a rebadged Chrysler version, the future of the next Delta now seems significantly less secure.  Lancia was also due to receive the now-axed compact Chrysler sedan, a model which obviously now disappears from its future plans.

The current Delta has never appealed to buyers outside of Italy and in its domestic market it shifted just 16,846 units in total last year, itself well down from 20,293 units for the full year of 2009. This compares unfavourably to its initial sales targets of 60,000 units per year and is less than half the break-even point of around 45,000 units a year. Based on the C-segment Fiat Bravo (which itself only managed 24,997 sales in Italy last year), the Delta is hampered in particular in the showrooms through a too-high pricetag and a final finish that doesn’t live up to its premium market positioning.

With Chrysler cancelling its C-segment plans for the U.S., the metrics for the projected new Delta become more difficult to manipulate. This could lead Fiat to using the C-segment Bravo replacement instead, as part of its current penchant for no-cost rebadging across the brands (in another example, Dodge’s Journey R/T has become the Fiat Freemont). The next Bravo is, however, set to be quite a different animal, with Fiat CEO Sergio Marchionne on several occasions suggesting that the Nissan Qashqai (which has been quite successful in Italy) providing inspiration for the new car’s concept.

Junking its B- and C-segment options leaves Chrysler high-and-dry, with just three or four models to see it through to 2014 according to the most recent Business Plan. The Sebring (now known as the 200 as part of an attempt to shed its poor image) will be replaced in 2013 with a model based on Fiat architecture (the forthcoming lengthened and widened ‘D-Evo’ platform, which will also underpin the Dodge Avenger and Alfa Romeo Giulia), while the recently-refreshed E-segment 300 series and the Town & Country minivan both have to carry through to the end of the plan. The 300 series saw three new versions launched last week, the cosmetically-enhanced 300C (sporty) and 300C Executive (luxury) as well as the high-performance 300 SRT8 fitted with the new 6.4-litre HEMI V8 engine. On its 2010-2014 Business Plan, Chrysler also denotes the arrival of a ‘D-segment crossover’ in 2013; this will be a version of the new Jeep Cherokee/Liberty (which will also provide the basis of the proposed Alfa Romeo D-SUV) based on the D-Evo platform.