Can GM Be the Next Chrysler?

Cars and Drivers

Published: November 14, 2014 6:30 am

Although General Motors Co. (NYSE: GM) is dogged by news of recalls and deaths of drivers of its cars, its Cadillac, Buick and Chevrolet brands rate well in one of the most important surveys of car quality. At the other end of the spectrum, Fiat Chrysler Automobiles N.V. (NYSE: FCAU) models do poorly. Based on the same research, its Chrysler, Jeep and Dodge brands rank well below average.

The J.D. Power Vehicle Dependability Study helps car companies market and sell cars. But GM’s sales in 2014 have been poor, while Chrysler’s have been on fire. In the first 10 months of the year, GM’s sales total was 2,434,707 cars and light trucks, up 3.9%, which is well below the national average for the same period. Chrysler sales rose 15.3% to 1,726,539. The trend is not new. Chrysler posted better growth results than GM did in 2013, before news about GM’s recalls broke in the media.

GM’s problem is evident looking at its numbers. None of its main brands posted impressive sales through the first 10 months of the year. Its largest brand, Chevrolet, had an increase of 2.2% to 1.19 million. Sales at Buick were up only 4.0% to 189,000. And Cadillac sales fell 4.4% to 189,000. The only GM brand that did fairly well was its GMC truck division, which had a sales increase of 8.0% to 405,000.

Chrysler’s success is based almost entirely on trucks and SUVs. It has no luxury division. In light of the sales failures of GM’s Cadillac and Ford Motor Co.’s (NYSE: F) Lincoln, the decision by Chrysler to avoid the luxury segment, crowded by German brands, seems smart.

Sales of Chrysler’s Jeep line rose 46% in the first 10 months of the year to 571,585, based mostly on the success of its new Cherokee. Ram pickup sales over the same period rose 26% to 379,647. The primary reason was the success of its flagship heavy-duty vehicle. The success of the two brands more than offset the fact that Chrysler has had trouble selling its two car brands. Through the first 10 months, sales of the Chrysler division dropped 4% to 250,612. Sales of Dodge cars were off 4% to 485,469.

If there is a lesson to Chrysler’s success and GM’s mediocre performance, it is not consumer quality perception. Chrysler has created two brands that customers flock to. GM has created none.

ALSO READ: 10 Brands That Will Disappear in 2015

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