"La macchina nuova è di lei."

Translation: The new car is hers.

[alonl]

Shouldnt "hers" be la sua?

[vanchy]

it's both correct, because it both possessive form of "lei":
"di lei" means literally "from her", which is the same as "sua" which means "hers".
so it's basically interchangeable, except that I don't think one would use in English "from her" that much in written language, it comes more with finger pointing at someone :)

[Walentinio]

I think, one can use "di lui" or "di lei" when one needs to clarify whether "suo" means "hers" or "his".