Demand for Domestic Car Brands Fades in China

China's effort to bolster its domestic car brands is faltering as the country's consumers continue to clamor for foreign nameplates, Bloomberg News reports.

The news service says Chinese auto brands currently control only 37% of their domestic market, down from about 50% less than three years ago.

The China Assn. of Automobile Manufacturers predicts as many as half of China's 177 domestic carmakers will fail within three years. In July the country's central government said it will revoke production permits for companies that fail to produce at least 1,000 passenger vehicles per year for two consecutive years.

J.D. Power and Associates says local carmakers have boosted their quality 30% since 2010 to an average 309 problems per 100 vehicles. That compares with 177 problems for foreign models in China and only 102 problems for cars sold in the U.S.

Executives at several Chinese companies tell Bloomberg they have gained little from production alliances with foreign carmakers. Analysts say China's biggest vehicles producers Dongfeng, FAW and SAIC have largely ignored their own brands because they are satisfied with the profits they generate making vehicles with their Asian, European and U.S. partners.