China is the world's largest automotive market and as its expanding middle class becomes wealthier they will continue to desire Western luxuries, including vehicles. General Motors (NYSE:GM) and Volkswagen both have very strong positions in the region, whereas Japanese rivals continue to see sales decline after a territorial dispute with China. GM's crosstown rival Ford (NYSE:F) is making real progress, but still trails by a large margin. As GM continues to improve and refresh the industry's oldest vehicle lineup, it's no surprise that July was a record-setting month for GM's sales in China – and the good news doesn't stop there.

Quick hits

  • Through July, GM and its joint ventures rose 10.7% to 1.78 million vehicles sold – an all-time high for the period.
  • General Motors and its joint ventures topped 200,000 sales in July for the first time at 221,580 units.
  • Shanghai GM's sales rose 16.7% for a July record of 113,239 units.
  • SAIC-GM-Wuling also set a July domestic sales record, up 6.1% to 104,682 units.

GM has been the sales leader among global automakers in China for eight straight years and expects to sell more than 3 million vehicles in the region throughout 2013. Buick sales told one of the best stories by brand in the month of July with sales increasing 25.7% to 66,208. While Chevrolet sales were down slightly, 3.4%, sales of the Malibu jumped 400% accounting for roughly one-fifth of Chevy sales in China. GM's luxury Cadillac brand has enjoyed a solid year and is up 82.8% in China for 3,688 units sold in July – roughly one-quarter the sales volume seen in the U.S.

The good news for GM investors doesn't stop with the increase in sales, as the company recently broke ground on a Cadillac assembly plant in China. That will enable GM to produce its luxury lineup in China and avoid importing the vehicles, which generally has priced them out of the market. If the ATS, CTS, and XTS export the success found in the U.S., then Cadillac sales will begin to improve quickly when the factory comes on line.

GM also has its sights set on the future growth potential of auto sales in China as it plans to invest $11 billion in the region by 2016 – mostly on assembly plants and products. The four new assembly plants will boost GM's annual capacity to 5 million vehicles by mid-decade, according to Bloomberg.

Bottom line
If growth in China reaches the lofty estimates some have thrown out there – 30 million by 2020 from 19 million in 2012 – then investing in the automaker best positioned for success in the region will bring market-beating gains. GM seems to be well positioned in China already, and is looking to double down on its position