If the Chrysler bailout was intended to preserve American innovation, it’s looking a bit problematic. The company’s plan for recovery sees it mostly relying on foreign brands like Italy’s Fiat, Japan’s Nissan and Britain’s Group Lotus for new models. Chrysler doesn’t have much of a choice, since 40 percent of its engineering staff has been laid off.

If it’s all about jobs, there’s firmer ground, since many of the new cars will be made in North American plants (and many in Mexico, too). And it’s definitely a plan that gets gas guzzlers off the road. Chrysler’s current made-in-America lineup is such a catalog of poorly made losers that we should welcome an infusion of new ideas, particularly from Europe and Japan, where fuel efficiency is the byword.

Having just been to Italy and seen the cute-as-a-button Fiats on the streets of Rome, I can predict a love affair akin to our zeal for pizza and spaghetti. The Fiat 500, definitely in Chrysler’s plans, is as endearing as the Volkswagen Beetle.

Chrysler had also been developing the Mini-like Dodge Hornet in partnership with Nissan, but that effort was put on hold last month for financial reasons. The Dodge Circuit electric car, which may or may not be produced, is a Lotus Europa with batteries.

Chrysler’s viability plan says that it will release as many as six small to midsize cars (most of them rebadged Fiats) in 2011 or 2012. I have to say this is an audacious plan. Chrysler will become more a licensing entity than a manufacturer. But if it taps into the considerable foreign expertise in building small cars, it might just work. 

Here's a British-accented Alfa MiTo road test, pitting it against a Mini Cooper convertible:

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