I’m in Italy with Fiat, finding out about the owners of America’s third-largest car company, Chrysler. And, naturally, all we want to know is what the Italians intend to do to the folks in Auburn Hills.

Herewith, a few observations. On the PR side, they’ve put the power back with the brands. They have cut out what little flab was there. And they have given the power to the good people who know the products.

Fiat has decided to keep the Viper brand. This is proof they are car guys and understand that having sexy cars isn’t a bad thing. Now, if they can bring some Ferrari finesse in, all the better.

Apparently, it will be August before a product strategy is decided. But Fiat powertrain people were dropping hints at where synergies will be effected.

Let’s say Alfa returns to the U.S. with a 3-series competitor. Chrysler has a V-6 that would be handy. (It’s not a great V-6, but maybe there’s improvement that can be made.) The merging of both companies makes a super compact dual-clutch transmission financially viable.

Chrysler has electric cars and hybrids that are way ahead of anything Fiat has, apparently. And as Alfredo Altavilla, CEO of Fiat Powertrain Technologies told us, “the technology transfer from Fiat to Chrysler will not just be one-way.”

Fiat’s innovative camless Multiair technology, which helps lower CO2 emissions (or improves gas mileage, depending on which way you skin this particular cat) is “an add-on we can adapt for Chrysler engines,” Altavilla said. It’s certainly a smart and relatively cheap way to get closer to impending CAFE regs.

Perhaps the most interesting thing I heard, though, was Altavilla’s observation that diesels will die out in Europe. Here’s why. As European emissions regulations more closely mirror those in the U.S., where diesels have to perform comparably to gas engines, the cost of getting a diesel that performs as well as a two-cylinder turbo Multiair gas engine wil be $1200 more, at least. On a $12,000 car, that won’t fly. Diesels will make sense only to upscale automakers who need them to get good gas mileage for CAFE reasons and can pass the cost on to their richer buyers.

I know there’s a tendency to scoff at Fiat over here, but they are technically sharp and making money at the moment. When you look at how Fiat turned its wonderful old Lingotto factory in Turin into its HQ and a destination hotel and then compare that with GM’s abandonment of the great Albert Kahn HQ in Detroit, it makes you wonder.

Related posts:

1. Chrysler Outlines Future Product Plans Resulting From Fiat Agreement – Car News
2. Fiat and Chrysler: A Marriage Made for Washington – Interview
3. Fiat and Chrysler Announce Strategic Alliance – Car News
4. Chrysler and Fiat Alliance: Future Product Speculation – Car News
5. Driving Miss Fiat: We Sample Engines Likely to Come to the U.S.

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