SHANGHAI -- Unlike some state-owned carmakers, China Changan Automobile Group Co. is not content to live off the profits of its lucrative joint venture with a foreign partner.

Changan has worked aggressively to design and sell its own products, and this year its passenger vehicle sales have surpassed all other Chinese brands.

But success breeds overconfidence, and Changan -- which has big plans to expand production -- appears poised to repeat the blunders that hobbled domestic rivals such as Geely and Chery.

Changan is bankrolling the growth of its domestic brands with big profits from its 50-50 joint venture with Ford Motor Co. In the first half of this year alone, Changan Ford earned 7.4 billion yuan ($1.2 billion), and the partnership continues to launch new models and expand production.

Over the past six years, Changan used those earnings to finance a major r&d program. It has established tech centers in Italy, Japan, the United Kingdom and the United States.

The investment has paid off nicely. Supported by a series of model launches, Changan's sales of sedans, SUVs and multipurpose vehicles in the first nine months of this year surged 45 percent from the year-ago period to 420,000 vehicles. Now Changan is China's top-selling domestic brand -- a remarkable achievement for a company that started out selling cheap, low-tech microvans to farmers.

Ten years ago, the company started producing passenger vehicles, and now it is wrestling with problems caused by its breakneck growth.

For example, Changan has 10 models in its passenger vehicle lineup, but half of them generate sales of fewer than 4,500 a month.

Overcapacity is another chronic problem.

In 2009, Changan acquired Hafei Motor Co., a state-owned producer of sedans and microvans. Hafei's plants can build as many as 400,000 vehicles a year. But due to its severely outdated products, it uses only 10 percent of its production capacity, according to Chinese media.

Despite all this, Changan is spending 2.8 billion yuan this year to expand production at its plants in Chongqing, Beijing and Hefei.

It also plans to invest 6.1 billion yuan to build assembly plants in Russia, Iran and other developing markets by 2020.

Even as Changan expands, its domestic brands have yet to generate a profit. It would make more business sense for the company to improve existing products and make better use of Hafei's production capacity, rather than build plants and expand overseas.

A few years ago, Chery Automobile Co. and Zhejiang Geely Holding Group pursued reckless expansion by building excessive capacity and launching too many products.

After paying dearly for their mistakes, these companies learned their lessons, scaled back production and trimmed their product lineups.