Lancia and C. Fabbrica Automobili was established on 27 November 1906 by Fiat racing drivers Vincenzo Lancia and Claudio Fogolin. The first production car, the Tipo 51 or 12 HP, appeared in 1907 with a four-cylinder engine producing 28 hp. From its earliest years the company prioritised engineering originality. The 1913 Theta was the first European production car with a complete electrical system as standard equipment. The 1922 Lambda introduced unibody (monocoque) construction to production cars along with independent sliding-pillar front suspension, both novelties at the time. A five-speed gearbox appeared on the 1948 Ardea series 3 — the first production car so equipped. The 1950 Aurelia introduced the first production V6 engine and the rear-mounted transaxle, a layout later adopted by Ferrari, Alfa Romeo, Porsche, and others.
Vincenzo Lancia died of a heart attack in 1937. His wife Adele Miglietti and son Gianni Lancia took control, recruiting engineer Vittorio Jano — previously responsible for the Alfa Romeo P2 and P3 Grand Prix cars — to join the company.
Under Gianni Lancia's direction the company decided to enter Formula One. Jano designed the Lancia D50, which was entered in the 1954 Spanish Grand Prix, where Alberto Ascari took pole position and set the fastest lap. At the 1955 Monaco Grand Prix Ascari crashed into the harbour after missing a chicane; one week later he was killed in a testing accident at Monza while driving a Ferrari. With Ascari dead and Lancia facing financial pressure, the company withdrew from Grand Prix racing entirely. The remnants of the Lancia team — cars, equipment, and designs — were transferred to Scuderia Ferrari, and Juan Manuel Fangio won the 1956 World Championship driving a Lancia-Ferrari. In total, Lancia scored two victories and ten podiums in Formula One during its brief participation.
Lancia's dominant chapter in motorsport was the World Rally Championship, where it remains the most statistically successful manufacturer in history. Prior to the WRC's formation, Lancia took the final International Championship for Manufacturers with the Fulvia in 1972. In the WRC era the company won the constructors' title with the Stratos in 1974, 1975, and 1976; with the 037 in 1983; and with the Delta in six consecutive seasons from 1987 to 1992. The Delta is the most successful individual model designation in the history of rallying.
Drivers who took multiple WRC wins with Lancia included Juha Kankkunen, Miki Biasion, Markku Alen, Didier Auriol, Sandro Munari, Bernard Darniche, Walter Rohrl, Bjorn Waldegard, and Henri Toivonen. Both Kankkunen and Biasion won the drivers' title twice with the Delta.
The sport's darkest moments were also linked to Lancia: Attilio Bettega was killed in the 1985 Tour de Corse driving a Lancia 037, and Henri Toivonen, the leading championship contender, died at the same event one year later in a Delta S4. The accidents contributed directly to the end of the Group B era.
In endurance and sports car racing, Lancia had notable success with the D20 and D24. Umberto Maglioli won the 1953 Targa Florio in the D20; the D24 spider (bodied by Pinin Farina) won the 1953 Carrera Panamericana, the 1954 Mille Miglia, and the 1954 Targa Florio.
In the late 1970s and early 1980s, Lancia returned to long-distance racing with the Beta Montecarlo Turbo, which won the FIA World Championship for Makes in 1980 and the World Endurance Championship for Makes in 1981. The Group C LC2 coupe, powered by a Ferrari engine, secured 13 pole positions but suffered from unreliability and fuel consumption against the dominant Porsche 956 and 962; Lancia withdrew from sportscar racing after 1986 to concentrate on rallying.
Fiat launched a takeover of Lancia in October 1969, accepted because the company was losing substantial sums. New models in the 1970s — the Stratos, Gamma, and Beta — showed Fiat intended to preserve the brand's character. During the 1980s Lancia cooperated with Saab on shared platforms and cooperated with Alfa Romeo and Fiat on the Thema, which also underpinned the Saab 9000 and Fiat Croma.
Sales peaked above 300,000 annual units in 1990 but had fallen below 100,000 by 2010. Following Fiat's acquisition of a stake in Chrysler in 2009, Lancia's European range was augmented with rebadged Chrysler models including the 300 (sold as Thema), the 200 Convertible (Flavia), and the Voyager; in the UK and Ireland these were sold as Chryslers rather than Lancias. All Chrysler-derived models were discontinued after 2015, leaving only the Ypsilon supermini, sold exclusively in Italy from 2017 onward.
Following the Stellantis merger in 2021, Lancia was grouped with Alfa Romeo and DS Automobiles to develop new premium electric models. CEO Luca Napolitano and chief designer Jean-Pierre Ploue unveiled a new design language called Pu+Ra (Pure + Radical) in November 2022. The fourth-generation Ypsilon launched in February 2024 and quickly led Italian sales charts in its opening months.
In May 2024 Lancia revived its HF performance division, with the Ypsilon HF and a Rally4 competition version marking the brand's return to rally competition. The Ypsilon Rally2 HF Integrale debuted in the 2026 Monte Carlo Rally and scored Lancia's first WRC2 victory in 34 years at the 2026 Croatia Rally, driven by Yohan Rossel and co-driver Arnaud Dunand. A new Gamma crossover and a future Delta hatchback are planned to expand the range alongside the Ypsilon through the late 2020s.