Although Lancia already had a mid-engined race car called "037" (or "Monte Carlo" for road version), this car was found outpowered (only 325hp, compared with 440hp of Peugoet and 500hp of Audi) and outhandled by rivals (2WD only, unlike Audi and Peugeot's 4WD). Therefore Lancia had to develop the Delta S4 as a replacement.

Like contemporary rivals, Delta S4 was styled and named to promote the mass-production Delta. In fact, under the skin it was a clean sheet design. Being disagreed with Audi Quattro Sport's front-engined theory, it adopted the more popular mid-engined layout. The engine was longitudinally mounted behind the front seats, directly driving the viscous-coupling LSD which transfered 30% torque to front wheels and 70% to the rear. At each of the corners of the steel tubular space frame chassis, double wishbones and twin absorbers were employed as suspensions. All these were covered by a glass-fibre / epoxy resin composite body. (Kevlar for race car)

While its 4WD system was not as advanced as Peugeot 205T16's (which had variable torque split between front and rear axles), its engine was by far advancer. As I know, it was the only car ever employed turbocharger and supercharger simultaneously.

Turbocharger is generally regarded as the most efficient means of forced induction, but it requires higher rev (hence a lot of exhaust gas) to operate. The result is poor low-speed power and the presense of turbo lag. On the contrary, supercharger performs strongly and instantly right from idle, but it is rahter inefficient in high rpm. For a rally car, a flat torque curve over a wide range of rpm is always very crucial, since rally car has to brake to very slow in tight corners and then accelerate to near top speed in 10 seconds. Therefore Lancia spent a lot money with Abarth to develop a system combining both turbocharger and supercharger to get a perfect output. It employed twin intercoolers, one for the turbo and one for the supercharger. The supercharger worked at low speed. Once the turbo cut in, a bypass valve relieved the pressure from the supercharger so that energy efficiency was be lifted.

This system was not only complex, but also faced great difficulties during development. The biggest problem was the transition between supercharging and turbocharging, since a short zero-boost period existed. However, after further developement, this problem was eventually solved.

As a result, the 1.8-litre engine had an outstanding power of 250 hp and a healthy 214 lbft of torque, while the rally car had at least 470 hp and 333 lbft.

Like other Group B cars, only 200 units of road version were made to fulfill the minimum requirement for homologation.

In WRC, Delta S4 experienced a dramatic fate. It won its debut race, then continued to dominate the following races and was leading both the driver and manufacturer championship standings. Such excellent results amazed everyone, since it was a completely new car. In 1986, Tour de Corse (Corsica Rally), leading driver Henri Toivonen and navigator Sergio Cresto crashed in their S4 and both were killed. The team lost its momentum and eventually handed the title to Peugeot. This accident led to the rethink of Group B cars. Races went on but finally FIA annouced the termination of Group B, because it was too powerful and dangerous. Therefore, Delta S4 became the most outstanding rally car in history that did not won world title.