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Dismal sales numbers, crumbling market share and an outdated lineup are staring Fiat SpA and Chrysler Group LLC chief executive officer Sergio Marchionne in the face as he prepares to unveil a sweeping reorganization for the company Fiat saved from the scrap heap five months ago.

In four of the five largest segments in the U.S. market, Chrysler vehicles are also-rans, most notably in the two largest segments - compact and mid-sized cars.

The Dodge Caliber was 13th in sales out of 20 in the compact conventional market and The Dodge Avenger and Chrysler Sebring stood 10th and 13th out of 17 in mid-sized cars as of September.

Addressing Chrysler's shortcoming in compact cars is one of the key issues the restructuring will address, with confirmation that the Fiat 500 will be assembled in Mexico beginning next year for the North American market. Mr. Marchionne will unveil Chrysler's five-year plan at a day-long presentation at Chrysler's headquarters in Auburn Hills, Mich., on Wednesday.

Offering the Fiat 500 is just one element of a plan that will outline which Fiat models and platforms will be shifted to North America, which Chrysler models will get the axe and how the Italian-based auto maker hopes to halt years of market share decline that sent the Detroit auto maker into chapter 11 bankruptcy protection earlier this year and a bailout from U.S. and Canadian taxpayers.

It will be a long and difficult task for Mr. Marchionne to revive Chrysler.

It now stands fifth in overall sales in the slumping U.S. market; its share of that market has fallen almost two percentage points this year, and just last week, Consumer Reports magazine said one-third of its vehicles were much worse than average in terms of quality.

The Fiat 500 is "absolutely vital" for a company comeback, says David Kelleher, who owns two Chrysler dealerships in the Philadelphia area. "It's absolutely vital because we need to have an image that we have versatility in our lineup."

The current image is that Chrysler is a producer of gas-guzzling sport utility vehicles and pickup trucks. It's suffering from that image in a market that has turned away from such vehicles to crossover utility vehicles and passenger cars.

The 500, which helped Fiat recover from a crisis of its own earlier this decade, is actually a subcompact that will give Chrysler a presence in a segment where it has no car. It will help Chrysler meet U.S. corporate average fuel economy requirements and give the company a car that's easy on gas as fuel prices rise.

Chrysler's task is to tune in to consumer demands in a crowded market. "The competition is so stiff out there," notes Bruce Belzowski, associated director of the University of Michigan's Transportation Research Institute. "You've got to bring your game. If you can come in with better styling and if you can meet the requirements of the consumers, you have a chance."

Analysts believe a credible vehicle from Chrysler in the mid-sized car segment - where sales have totalled 1.27 million vehicles this year - is critical. "To be a full-fledged car company in the U.S., you have to compete in that segment," Prof. Belzowski says. "When people walk into your dealership, they have to be able to see vehicles that are going to be competitive with the rest of the fleets that are out there."

Chrysler has sold just 48,572 Avengers and Sebrings combined, compared with the segment-leading Toyota Camry, with sales of 252,630.

A temporary repair job for the Sebring and Avenger is in the works, with a redesign of the front and rear ends and a new interior, sources said.

But Fiat is expected to come up with a longer-term solution in the form of a model for Chrysler from its sporty Alfa Romeo division.

The restructuring plan is also expected to address Chrysler's manufacturing capacity in North America. Ontario assembly plants in Windsor and Brampton that make minivans and full-sized cars respectively will remain a critical part of the company's operations. The Brampton facility is expected to add an Alfa Romeo car that will be produced in low volumes, said a source.

The rebirth of Chrysler will need to be combined with a marketing campaign to restore some lustre to the company's brands and convince drivers that "the Fiat stuff is better" than what Chrysler offered before, says Leonard Lodish, a professor of marketing at the University of Pennsylvania's Wharton School of Business.

"I think they might have to put a longer warranty on at least the Chrysler [cars] and maybe the Fiat ones," Prof. Lodish says. "That would be a way of telling the public 'you know what? We're going to back you and we'll stand behind our cars.'"