General Motors (NYSE:GM) and Chrysler (NYSE:FCAU) Experiencing Bizarre Phenomenon on Quality Perception

General Motors Co. (NYSE:GM) management is quite determined to restore its image which got severe hit by the recent recalls and a good number of drivers death driving its cars especially with faulty ignition switch. Despite all the happenings, General Motors top luxury brands like Cadillac, Buick and Chevrolet got very good ratings as per one of the premium car quality survey. While on the other hand, the detailed report released by the same research indicates that automobile brands of Fiat Chrysler Automobiles N.V. (NYSE:FCAU) do not hold a good market position since its Chrysler, Jeep and Dodge brands are quite below average.

Historically it has been an established reality in U.S. car market that J.D. Power Vehicle Dependability Study facilitates auto carmakers to promote their models and sell them. However, GM (NYSE:GM) car sales remained much below par in 2014 despite high ratings in the survey. Whereas, the tides turned on Chrysler (NYSE:FCAU) which in spite of poor survey ratings saw its sales growing exponentially. Analysis of automobile sales during the first 10 months of 2014 shows that GM was able to sell a total of 2,434,707 cars and light trucks during the period registering an increase of 3.9% which is much below the national average. Chrysler managed to sell 1,726,539 units during the period showing a healthy increase of 15.3%. This trend however is not a new phenomenon. Chrysler overshot GM in terms of sales growth last year as well even before GM’s recalls news was reported by the media.

The dilemma faced by GM (NYSE:GM) becomes quite obvious by merely understanding numbers. During the first 10 months, not even a single key brand of GM was able to make imposing sales figures. A total of 1.19 million units of Chevrolet, which is its leading brand, were sold with a growth of 2.2%. GM sold 189,000 Cadillac cars with a 4.4% plunge while a mere 4% rise was observed in Buick with the sale of 189,000 units. GMC truck division was the only area which came up with healthy growth of 8% with 405,000 trucks sold.

Chrysler’s (NYSE:FCAU) achievement was due to its focus on trucks and SUVs as it avoided stepping towards luxury brands. This was quite an intelligent move by Chrysler because GM’s (NYSE:GM) Cadillac and Ford Motor Co.’s (NYSE:F) Lincoln were not able to compete their German counterparts in luxury brand segment.

In the first 10 months, Chrysler’s (NYSE:FCAU) jeep sales sky rocketed by 46% to 571,585 thanks to new Cherokee, whereas sales of Ram pickup reached 379,647 showing an increase of 26%. Both these brands offset the adverse effects of Chrysler’s two car brands namely Chrysler division and Dodge cars whose sales declined by 4% to 250,612 and 485,469 respectively.

Therefore, consumer’s perception of quality is not at all the factor behind Chrysler’s strong sales growth and GM’s (NYSE:GM) below par show. In fact, Chrysler (NYSE:FCAU) was able to launch two brands attracting customers and GM could not even come up with one. This is a strong sign that things could improve for the company.