Associated Press - These should be good times for Chinese carmakers as they show off their latest models at the Shanghai car show.
Their home market is the world's biggest and growing. But independent carmakers such as Chery and Geely are being squeezed by bigger, richer global rivals including General Motors and Nissan that have moved into turf the Chinese makers considered their own: low-priced models for local tastes.
Domestic brands account for less than half of their own market.
"At a time when the Chinese were getting ready to move upscale, they have come under siege in their area of traditional strength," said Michael Dunne, president of research firm Dunne & Company. "They didn't see that coming and it hurt.
"I've been waiting for the day when we could say, here come the Chinese, look out," he said. "But the reality is mixed. Some are better, some are worse off. At this point it's more a matter of trying to hang around and stay in the game."
Chery, Geely and local rivals Great Wall and BYD are scaling down ambitious expansion plans and focusing on improving quality. Some hired managers or designers with experience at Mercedes Benz and other foreign producers.
Others aim at specialties such as SUVs and minivans for export to other developing countries, and electric buses.
Chery recently announced a corporate overhaul after sales plummeted 10 per cent last year. The company said it would shrink its range of 20 models to 11 or 12.
BYD Company, in which American investor Warren Buffett's Berkshire Hathaway owns a 10 per cent stake, is displaying a new SUV and its Si Rui sedan at Auto Shanghai 2013, which opened last Sunday.
The company, China's leading maker of electric cars, blamed intense competition for a 94 per cent plunge in profit last year and says the midsize Si Rui should help to drive a rebound.
Great Wall Motors is debuting two SUVs, a pickup and a sedan among 23 models on display. Last year, the company was China's top-selling independent carmaker on the strength of its popular SUVs, which are exported to 80 countries.
China's failure to follow its neighbours Japan and South Korea in creating at least one global car brand - even after the country passed the US in 2009 as the biggest auto market - has frustrated communist leaders.
They see car making as a national priority - the "industry of industries" that supports higher-paid jobs in fields from manufacturing to electronics to chemicals.
Beijing issued development plans in the early 1990s that called for creating three globally competitive vehicle groups. Since then, planners have changed course repeatedly after efforts to create success by decree failed to pan out.
In March, domestic Chinese car brands accounted for only 43.4 per cent of sales, according to industry group, the China Association of Automobile Manufacturers. The rest were imports or foreign brands assembled in partnership with local manufacturers.
By contrast, Japanese carmakers control a commanding 95 per cent of their home market, according to LMC Automotive, a consulting firm. South Korea's producers have 82 per cent of theirs.
Global carmakers that want to produce in China are required to work with local partners in hopes the Chinese manufacturers will learn enough to launch their own brands - a policy that has had little success.
Shanghai Automotive Industries, which assembles cars for both GM and Volkswagen AG, created the Roewe brand based on models bought from defunct British producer Rover. Nanjing Automotive Group relaunched MG sports cars in China.
But state-owned producers still make up to 80 per cent of their revenue as service providers to foreign brands.
More recently, Beijing has stepped up support to independents that emerged over the past decade such as Chery and Geely Holding Group, which acquired Volvo Cars from Ford Motor Co.
Chery, founded in 1997, was once China's top-selling independent brand but sales tumbled last year to 563,000 vehicles. Its turnaround plan calls for eliminating two of its three brands and selling all its vehicles under the Chery name.
Until now, the bulk of government vehicle purchases were foreign brands assembled by SAIC and other state-owned manufacturers such as First Auto Works and Dongfeng Motor Co. Communist authorities also tried to find a shortcut to success by encouraging companies to pursue electric cars, an emerging field where they had a shot at a pioneering role.
In 2009, they set a goal of producing up to five million electric vehicles a year by 2020 but have informally backed away from that after development proved tougher than expected. BYD, the Chinese leader in electric vehicles, sold just 1700 electric cars and 700 electric buses in 2012 and says it expects to triple that this year.
Chinese brands also face a slowdown in overall sales, though to still-robust levels that outpace Western markets.
Sales in March rose 13.3 per cent from a year earlier to 1.6 million vehicles, well below 2009's explosive 45 per cent growth, according to the China Association of Automobile Manufacturers.
German and Korean carmakers outgrew the market, posting sales of more than 20 per cent from a year earlier. Sales of Chinese brands rose 14 per cent, only slightly above the market average.
