BEIJING (Caixin Online) — It is no exaggeration to describe China's automobile market as rolling into its Golden Age.

The China Association of Automobile Manufacturers' latest data show that from January to April the sales of passenger cars grew by 10 percent to 6.48 million. The U.S. car market had a growth rate of 1.4 percent in the same period.

Meanwhile, sales of imported cars in China grew by more than 20 percent. Joint-venture brands also saw strong expansion. While the JV of Chinese auto group FAW and Germany's Volkswagen sold more than 920,000 cars, a growth of 17.5 percent compared with the same period last year, General Motors sold 1.2 million cars for growth of 11 percent.

But in this context, we must also note that sales of China's domestic brands have continued declining. After sliding for three straight years, domestic brands' market share has now plunged to 38 percent overall. Thus, while the country's automobile market has finally and fully matured, its indigenous manufacturers face a grim outlook.

The challenges confronting China's brands are two-fold: intensifying competition from abroad and the failure to make the necessary adjustments at home.

Independent Chinese-branded cars are being squeezed by both JV-manufactured cars and imports, both in product lineup and cost.

The best examples are the various models launched by FAW-Volkswagen. These siblings were born from the same platform and are at the top of the sales charts all year around. Toyota follows suit by separately offering both the American and European versions of its best-selling Corolla model to different Chinese JV vendors.

In addition, both FAW-Volkswagen and Nissan have launched one "affordable car" series priced around 50,000 yuan after another. The low-end market is where domestic brands originally staked out their territory. It remains to be seen whether the invasion by the global auto industry leaders will lead to development of the domestic market or be a fatal blow.

Thanks to their greater scale and leading technology, JVs can use their cost advantage to further squeeze out competitors. By manufacturing a series of models of the same class of cars using the same platform, these companies' cars can share a high proportion of the same parts and components, which reduces costs. Meanwhile, because of their bigger sales numbers, often over 1 million vehicles annually, JV companies have the means to grow further.

Most of the local brands do not have a sufficient cost advantage to keep up with the price-reduction trend. Take the best-performing Changan Automobile as an example. The company estimates it will sell 600,000 cars this year. If the JV brands dip further in price, it's difficult to predict how much margin the local brands have. As Dong Yang, secretary general of the China Association of Automobile Manufacturers, said, just one-fifth of the domestic brands have steady profitability, another one-fifth make a small profit and the rest are losing money.

In addition, local brands also face the double dilemma of upgrading and time pressure.

In recent years many local carmakers have chosen to break through by producing premium cars with higher profit margins. However this path is tough. Great Wall Motor's Haval H8 SUV was forced to postpone its launch twice due to component integration problems, and Changan Automobile suspended its high-end plan to focus on developing its parent brand and its R&D.

Is it too late for local carmakers to turn it around? Many have realized the problem and have started to transform themselves over the past two or three years. Several companies, such as Chery and Geely, have changed their branding strategies, and are also trying to raise their technological level through acquisitions, fundraising and building their own auto research centers. They are also relying on international teams.

But this comes as many cities are tightening vehicle purchase rules and license plate restrictions. This, coupled with the threat from foreign brands, means the country's automakers don't have much time to save themselves.