Fiat were famous in the 70s and 80s for producing cars that would rust away before the tires needed changing. Obviously an exaggeration but they used cheap Soviet steel (sometimes called washing machine grade in the motoring press).

The 500 is fun (to look at, not to drive) but the Tipo, Punto, Panda etc are pretty dreadful.

As to how they got to their position, I’d say that being effectively a flag carrier manufacturer helped sustain them and Chrysler were pretty desperate for a partner after the Daimler split.