China Luxury Auto Boom Expected to Continue: General Motors Company (GM), Ford Motor Company (F)

The other U.S. automaker at play in China is Ford Motor Company (NYSE:F). It started slowly, but it’s now growing very rapidly, on strong demand for its Focus model and the drawn-out boycott of Japanese automakers sparked by a territorial dispute between the two countries. Nissan Motor Co., Ltd. (ADR) (PINK:NSANY), Toyota Motor Corporation (ADR) (NYSE:TM) , and Honda Motor Co Ltd (NYSE:HMC) have all ceded market share to Ford Motor Company (NYSE:F) and other non-Japanese car companies over the past year because of this boycott. Their declines have narrowed significantly in recent months, however, suggesting sales patterns are gradually returning to normal.

Ford Motor Company (NYSE:F), though, hopes to continue capitalizing on the growing popularity that drove its sales up 43% year over year in December, and 98% year over year in January. While precise comparisons for the latter month are distorted by this year’s timing of the China Lunar New Year, the increase is nonetheless quite impressive, and it demonstrates Ford’s understanding of the country’s auto buyers. Like GM, Ford will next try to replicate this success in the China luxury segment by introducing its Lincoln nameplate in 2014.

The bottom line

China’s auto market has been a bright spot for automakers worldwide, and the country’s newly announced economic direction should only boost sales. At the same time, the super-hot and extremely profitable luxury segment shows no sign of cooling. Analysts expect demand there to keep growing as higher incomes further boost demand.

There is room for a lot of winners, but the competition is also expanding. In addition to the premium options mentioned above, Jaguar Land Rover, Volvo and PSA Peugeot Citroen are among other global brands seeking a bigger piece of the luxury pie. GM and Ford have proven they can succeed in the overall market; now they have to show they can apply what they’ve learned to the luxury segment.

The article China Luxury Auto Boom Expected to Continue originally appeared on Fool.com and is written by Howard Rothman.

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