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A Fiat Inside of a Chrysler? Good Luck.

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In the US, it will be hard to shake Fiat's disastrous past.

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Americans love Prada, Gucci, and stylish Italian suits, but will they trust Italian engineering and buy a Chrysler with a Fiat engine?

The Detroit Free Press reported Tuesday that Chrysler is betting Fiat's small-engine technology will rev sales, but the plan looks like hope trumping reality.

Worse, Chrysler doesn't plan to introduce a mass-market hybrid car for at least five years. This all but concedes the market to Toyota (TM), maker of the sector leading Prius. Honda (HMC) and Ford (F) are moving more aggressively into the field.

The Chrysler-Fiat deal will help Fiat re-introduce the stylish Alfa Romero to the US market in the future, and by the end of next year Chrysler plans to introduce the Fiat 500 minicar to US drivers. The Fiat 500 was voted Europe's Car of the Year in 2008.

Chrysler depends heavily on its trucks and sports utility vehicles and tapping Fiat's line of small, fuel-efficient cars could extend the brand and benefit both automakers.

But neither company has developed a reputation for quality and it will take more than deft advertising to overcome the memories of Fiat's disastrous foray into the US market in the 1970s. The consistently poor quality produced a standard laugh line: Fiat was an acronym that stood for "Fix It Again Tony."

Fiat withdrew from the US market in 1983 after sales dwindled to about 14,000. At home, Fiat struggled when the European Union removed trade barriers intended to protect Italian cars from imported competitors. In 1990, Fiat was Europe's second-largest automaker after Volkswagen and now claims about 8% of the European market and 30% of sales in Italy. But that may not be enough to change its poor image in the US.

"Clearly, reliability is a challenge for Chrysler," Consumer Reports magazine says. "…For those Americans who recall when Fiat cars were sold here, the brand made a less-than-stellar impression. Looking back at reliability ratings from the late 1970s…the Fiat 128 and 131 received a worse overall reliability rating for several years."

The magazine also cites a British auto trade publication which notes, "Among the 38 brands featured, Fiat ranked 35th, followed by Renault, Land Rover, and Chrysler/Dodge…Fiat, Chrysler, and Dodge are categorized as 'very poor.' In total, Fiat, Chrysler, and Dodge provide similar reliability, and it isn't good."
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