Their product is too small and it's too much of a niche market for America. When Mini came here it was a svelte, compact, driver's car that also appealed to the "Oh, it's so cute!" hairdresser crowd.
Then over time the later started to say "I like my Mini but it's just too small" and the Mini went from being a long distance runner to a track team drop out in college that packed on more then the Freshman 15. The present Minis have lost all of their appeal to me and they just look like a bloated version of the first gens.
If you want to sell a "small car" then you need it to be a small car and you need to appeal to traditional small car buyers. People that want a light, nimble car, with good driving manners or people that want something compact with good gas mileage that's easy to park and maneuver.
Europeans accept the later out of necessity. America isn't full of crowded cobblestone streets and narrow alleys like Europe, it's all freeways and suburbs. You can either chose to be the bug or the windshield on the freeway here, and most people would rather be in that gigantic SUV or truck then driving a 500/Smart Car that looks and would act like a hockey puck in an accident. People that have absolutely no reason to really be driving an SUV (several passengers, towing capacity, cargo room, need for 4WD) do so anyway just because they think "BIG=safe". The majority of the American public will take the Big=safe theory and a higher forward visibility driving position so they can see around the rest of the damn SUVs around them on the road. 
If Fiat is going to survive here they need to get the Alfas here and present something in their regular lineup that will appeal to American consumers.
