Ford CEO Alan Mulally plants a kiss on the 7 millionth Transit van during a recent visit to China.

General Motors and Ford Motor Co. both reported record sales in China last month, continuing to brush aside concerns about the economy of the Asian nation which has shown signs of cooling down in recent months.

GM, in particular, has been gaining ground in China in recent months, closing the gap with long-time rival and traditional market leader Volkswagen AG. Ford, though showing strong, double-digit gains, is still playing a game of catch-up after long delaying its entry into what is now the world’s largest automotive market.

Sales by GM’s various joint ventures in China, increased 11.1% in July to 221,580 vehicles, which shattered the sales record set in July 2013. So far this year, China has become the company’s most important market, sales increasing by more than 10%. Last year, GM sold more than 2.8 million vehicles in China.

To underscore the growing importance of the Chinese market, GM this month announced that it would move Tim Lee, its head of International Operations, to a new post as chairman of GM China.

For its part, Ford is struggling to gain traction. Though July sales rose 71% — with a 50% increase for the first seven months of the year – Ford has yet to reach the 5% market share level, lagging well behind other traditional competitors, including not only GM and VW but Nissan and Toyota as well as several domestic Chinese brands.

(China now GM’s #1 market. Click Herefor details.)

Ford is hoping to reach a 6% market share in the Chinese market, up from 3.6% for the first half and just 2.5% last year. The maker’s CEO Alan Mulally recently toured Ford’s Chinese operations and was on hand to mark several key steps including plans to double output at a key engine plant which would permit significant growth on Ford’s assembly lines.

Significantly, about half of Ford’s Chinese volume comes from the Ford Focus – or, more precisely, from two versions of the compact sedan, a newer, global model and the previous “classic” version that Ford has continued to produce in China as a price leader.

GM has been pushing north from the 10% share it held in 2012 – compared to VW’s 19.5%. The U.S. maker has also set an ambitious goal of reaching 5 million sales in China before decade’s end.

(Ford may begin exporting vehicles from China, says Mulally. Click Here for details.)

The U.S. giant saw all but two of its brands operating in China gain momentum during July. The Buick division jumped 25.7% while joint venture Shanghai GM saw a 16.7% increase. SAIC-GM-Wuling posted a 6.1% gain, setting a July record. The new Baojun brand, which targets first-time buyers in smaller Chinese cities, tripled its year-over-year sales, setting another record.

Cadillac, meanwhile, reported an 82.8% increase, albeit from a small base. Caddy recently  began producing the XTS sedan in China. But the brand is a latecomer compared to key European competitors such as Audi, BMW and Mercedes-Benz.

The two sour notes were sounded by the Wuling brand, which reported a 3.4% sales decline in July, while the FAW-GM joint venture was off 4.1%.

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The Chinese market remains one of the world’s fastest-growing but there have been signs of a slowdown over the past year as the broader economy has begun to cool. Complicating the situation, regulators are curbing sales in a number of major cities, including Beijing, Shanghai and now, Chengdu, as they struggle to deal with problems such as traffic congestion and air pollution.

Paul A. Eisenstein contributed to this report.