DOMESTIC carmakers, led by SAIC Motor Corp., are no longer content to be junior partners of General Motors Corp. (GM) and Volkswagen AG (VW).

SAIC Motor, the nation’s largest carmaker and a joint venture partner of GM and Volkswagen, will highlight its Roewe brand at the Shanghai auto show, which opens Friday. SAIC has the biggest display at the show, surpassing Ford Motor Co.’s exhibits in 2005.

China’s more than 100 automakers say cars being developed for sale at home and abroad will lessen their dependence on foreign partners. The competition threatens to erode profit margins at Honda Motor Co., DaimlerChrysler AG and the world’s largest carmakers, who have invested more than US$21 billion in China.

“China’s leading automakers have gained enough experience from overseas partners,’’ said Xu Lirong, who manages 2.2 billion yuan (US$285 million) at SYWG BNP Paribas Asset Management Co. in Shanghai and owns shares of Shanghai Automotive Co., SAIC Motor’s listed unit. “They have the capital and development strategies to catch up with or even surpass overseas companies.’’

Shanghai-based SAIC Motor has sold 6,300 Roewe 750 sedans, its first own-brand passenger car model, since October. The Roewe is based on design rights bought from the bankrupt U.K. automaker MG Rover Group Ltd. The company also plans to make hybrid vehicles, SAIC Motor president Chen Hong, said last month.

China is Volkswagen’s largest overseas market and demand in the country has made Asia-Pacific GM’s most profitable region. At stake is a passenger car market forecast to grow 40 percent to 7.3 million vehicles by 2010 from an expected 5.24 million this year, according to Ashvin Chotai, a London-based analyst at Global Insight.

China’s economy has grown by an average of about 9 percent a year for the past decade, making vehicle ownership affordable for more people.

Chongqing Changan Automobile Co., a Chinese partner of Ford, started making its first internally designed model, the Benben compact, Sept. 20. The Chongqing-based company plans to invest 6 billion yuan to develop its own designs by 2010. It aims to introduce at least 10 models and sell more than 250,000 of them over the next five years, Vice chairman Xu Liuping said last year.

Chery Automobile Co., China’s first vehicle exporter, will display 30 new models at the Shanghai show. Geely Group Co., the nation’s largest private automaker, will show 14 new models.

“It’s time for Chinese carmakers to show off their own brands to the world,’’ said Tang Guifa, president of Shanghai International Exhibition Co., organizer of the show, called Auto Shanghai. “Just as no on can ignore the Chinese market, no one will be able to ignore Chinese-brand cars.’’

The carmakers are responding to a government directive to develop their own technologies and brands by the end of 2010. The government wants to combine the nation’s automakers into a dozen groups under an industry policy adopted in June, 2004.

Having their own brands also means domestic carmakers don’t have to share earnings with partners. Price cuts squeezed the 2006 profit margins of domestic automakers to 3.1 percent, compared with an average 9 percent in 2003, according to estimates based on figures from the China Association of Automotive Manufacturers.

Ford lost US$12.6 billion last year and GM posted a US$1.98 billion loss. That compares with 1.4 billion yuan profit at Shanghai Automotive Co., a 29 percent rise. Net income at Chongqing Changan Auto more than doubled to 434 million yuan last year.

China surpassed Japan to become the world’s second-biggest vehicle market last year, as sales rose 25 percent to 7.22 million units. Self-designed models’ market share will grow by as much as 6 percentage points annually, according to Yale Zhang, director at CSM Asia in Pudong, Shanghai.

“Innovation and self-designed products will be a major momentum to keep the rapid growth in China’s auto industry,’’ said Zhang. “There is much more room for them, compared with the overseas companies.’’  (SD-Agencies)