China's third-largest domestic automaker, Dongfeng Motor Group Co., managed to beef up sales by 28 percent in the first half of 2008, and more importantly, increased its net profit by 27 percent.

Dongfeng may get even more momentum with hybrid and electric models in the works. The company told the South China Morning Post that it's investing 33 billion yuan on the development project. Part of the fund will be provided by Dongfeng's joint-venture partners Honda, Nissan and Peugeot.

While Dongfeng still doesn't have a clear timeline, privately-owned Chery Automobile Co. Ltd. is already introducing a hybrid model to the market this month. Another domestic automaker, ChangAn Auto Co. Ltd., also is commercializing a hybrid sedan, according to China Quality News. BYD Auto Co. Ltd. is leveraging its lead in the battery business and preparing to commercialize two electric models in the second half of 2009. Geely Automobile Holdings Ltd. is scheduling a 2010 debut for an electric model.

High-mileage and low-emission models are definitely what China needs. Gas prices are still being subsidized, but that won't last forever. Commuters stuck on jammed highways every day will appreciate a hybrid or electric ride.

Note that Chery's hybrid model is selling for 100,000 yuan (about $14,629).

Western and Japanese automakers are not taking active positions in the ongoing hybrid/electric car race in China. Although many of them have hybrid models already, they are not localizing them for the Chinese market. Maybe they are too busy dealing with the North American market. But if they lose out in this round, they'll be offering a golden opportunity for Chinese domestic automakers -- still struggling with exporting to such developed markets as the U.S. -- to claim bigger share in their home market.