Not wanting to be unhelpful, but this is a very good reason not to buy a Mac, an iPhone or to use iTunes as you're always going to be limited as to what you can do.
What multispoke has suggested in terms of updating the car and also the iPhone is the best thing to try.
Very odd response Maxi...
ackie... nothing wrong with Macs at all they are Rolls Royce of products (I have been using Macs since 1989, PCs a bit longer), perhaps the answer should be don't buy a Fiat because Fiat can't be a***d to provide a solution for iPhone 4, can't be that hard, I bet within 2 years they will move from Win to Apple !!
Anyway back on topic, there are compatibility issues with iPhone 4, worth trying your configuration with IOS 4 on iPhone 3 just to confirm. Not applicable to you but cars delivered from May 2011 and pre iPhone 4 work seamless so new car owners don't need to convert to a substandard MP3 from a lossless format, be it PC or Mac based.
Okay here is a solution to your issue (note not for DRM, but that's possible too see below).
1) iTunes, preferences, general, Ask to import CD, click import settings and choose MP3 Encoder and setting you desire (192k perhaps or even custom at 320k, although I have not tried it)
2) go to iTunes window and select the songs you need, right click and convert to MP3
3) enable "KIND" as a heading and sort by this and locate all MP3
4) craete a playlist, call it Fiat 500 and drag all MP3 songs into that
5) using a compatible iPod/iPhone do the sync and try playing that
Also worth a try on USB, but you will have to drag the .MP3s from folder level to USB
For DRM based songs you will have to create an audio CD.
Good luck and let me know how you get on.