Almost a year into its government-funded rescue, Chrysler remains a laggard in sales against the industry and analysts increasingly question if Fiat can change the game for its struggling U.S. partner.

Some of those questions may be answered on Wednesday when Chrysler reports post-bankruptcy financial results, while across the Atlantic, Fiat unveils its first strategic plan in Italy since its marriage to Chrysler last year.

Chrysler is expected to show the benefits of cost cuts it has undertaken and cash savings realized when it provides the first full accounting of its performance since emerging from bankruptcy in June.

But more questions than answers could still remain about Chief Executive Sergio Marchionne's turnaround strategy.

The jury remains out as to whether Fiat can stem the long-running slide in sales and replenish a depleted product lineup. In short, how can Fiat succeed where previous owners Daimler AG and Cerberus Capital Management walked away bruised by losses, analysts wonder.

Every month is critical for Chrysler because now we are seeing a broad-based recovery of auto sales, which most of the companies are participating in. And yet, Chrysler remains a laggard, said Logan Robinson, a professor at the University of Detroit Mercy School of Law and former Chrysler executive.

They still have an excellent balance sheet because of bankruptcy, so I think they can sustain this for some months to come -- but not forever, Robinson said.

Chrysler was the only major automaker to post lower U.S. sales in the first quarter, reporting a 5 percent drop from the same period in 2009 while the industry rose 16 percent. As a result, Chrysler's U.S. market share fell to 9.2 percent in the quarter from 11.2 percent in the same period a year ago.

Chrysler's continued struggles came even as General Motors Co GM.UL, which went through its own bankruptcy, posted a 17 percent increase in U.S. sales in the first quarter.

This is a direct outcome of their really weak portfolio, said Oliver Hazimeh, a partner at consulting firm PRTM. This is not about cost reductions or anything, this is about products.

By contrast, while GM's first year after bankruptcy was dominated by struggles to unload unprofitable brands such as Saab, Hummer and Saturn and continued management shake-ups, the automaker still has products customers like, Hazimeh said.

For his part, Marchionne has said Chrysler's sales are above the company's internal targets and have been falling as a natural outcome of reducing incentives to buyers.

We've been sticking to our guns and its worked well so far, Marchionne told reporters in late March.

Marchionne told reporters he was more comfortable with Chrysler's turnaround than he had been a year earlier.

The automaker had more than $5 billion cash in late March, while it had $4 billion when it emerged from bankruptcy in June 2009, he said.

Chrysler's average incentive spending fell 24 percent to $3,537 per vehicle in the first quarter, but it is still the highest of any automaker in the U.S. market and well above the industry average of $2,705 per vehicle, according to industry tracking firm Autodata Corp.


Analysts and industry experts have warned that Chrysler could run short on time to steer its faltering operations toward recovery.

Chrysler is saying they're simply awaiting the Fiat products and then everything will change. Ultimately that will be the acid test, Robinson said.

Under the former ownership of Cerberus, Chrysler was forced to freeze product development for much of 2008 and 2009 as it scrambled to save cash amid mounting financial problems.

Chrysler is counting on a dozen new vehicles based on Fiat platforms through 2014 to revitalize its aging, truck-heavy lineup. Chrysler plans to base as much as 56 percent of its volume on Fiat's platforms by 2014.

But the first vehicle due from Fiat -- the 500 small car -- is not expected to arrive in U.S. showrooms until December.

It is a cute car, there will be people buying it but I don't think it's a game changer, PRTM's Hazimeh said.

Analysts see nothing less than a complete overhaul as critical for Chrysler, whose lineup was called woefully uncompetitive by influential magazine Consumer Reports in its 2009 issue.

They need at least one or two what I would consider 'home runs' -- really nine out of 10 strong 'buy' recommendations by Consumer Reports, Hazimeh said. And they need to have two or three additional, also very strong, product offerings.

(Reporting by Soyoung Kim, editing by Maureen Bavdek)