This Detroit Automaker Recorded a Huge Sales Rebound in World's Largest Automotive Market

Chart by author. Information source: Ford Motor Company China press releases.

That change to reporting retail figures rather than wholesale units didn't diminish Ford's impressive fourth quarter. In October, Ford China sold 95,185 vehicles, a 7% jump compared to the prior year. Year-over-year gains continued to climb when Ford reported 106,283 units sold in November, a 9% jump. Then the folks at the Blue Oval recorded a 27% increase in December sales, up to 124,768 units.

The good news for investors is that Ford's sales in the Asia-Pacific region are generating meaningful pre-tax income, which demonstrates how important China will be for the automaker in 2016 and beyond, because it's where pre-tax growth will come from over the next five to 10 years.

Image source: Ford Motor Company's fourth-quarter presentation.

Fortunately, the company is starting off on the right foot in 2016. Ford China sold a record 130,832 vehicles in January, up 36% compared to the prior year. That favorable result was driven largely by record sales of the Ford Escort, the new Ford Mondeo (Fusion) and its entire SUV lineup. Ford's SUVs also posted a record-breaking month, with the Ecosport, Kuga (Escape), Edge, Explorer and Everest selling more than 37,000 units, a staggering 75% gain compared to the prior January.

"We are honored that customers are responding so positively to our vehicles," said John Lawler, chairman and CEO of Ford Motor China, in a press release. "The combination of great performance and great value is clearly bringing more people into Ford showrooms."

Ford wasn't the only Detroit automaker selling a plethora of vehicles in China last month. General Motors posted a 7.3% year-over-year gain in January, to substantial total of 421,023 units sold -- likely reinforcing GM's position as the No. 1 foreign automaker rank in China. (We'll know for sure once VolkswagenGroup reports sales figures.)

General Motors investors are typically more familiar with its sales in the U.S. market, and for good reason, as North America is responsible for the vast majority of the profits. However, GM actually sells more vehicles in China, and, unlike in America, the charge isn't being led by Chevrolet. Buick sales grew 39% in January to 138,907 units, compared to the prior year, and it marked the first time the brand has recorded 130,000 units sold in a single month.

A couple of other GM brand notes: Cadillac sales jumped 16% from a year earlier to more than 8,000 units, but Chevrolet struggled, posting a 27% decline to 56,133 units. The main question facing investors is: Can these sales figures continue? Or will the sales dry up as they did over last summer?

The road ahead

Despite the strong sales results in January, investors need to consider that operations in China are different than the U.S. market. For instance, the Lunar New Year holiday starts in early February, which analysts believe triggered strong car buying in January -- due to a stoppage in production and slowdown in economic activity. Typically, automotive industry analysts wait until February results are in the books before commenting on full-year projections and estimates. So, while January was an excellent start, investors should definitely take it with a grain of salt until January and February are balanced out.

On the bright side, China's purchase tax incentive will last through 2016, which should support sales for the rest of the year. Because of that, it should be another solid year for Detroit automakers in the world's largest automotive market.

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The article This Detroit Automaker Recorded a Huge Sales Rebound in World's Largest Automotive Market originally appeared on Fool.com.

Daniel Miller owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Ford. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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