THE Chinese market has been seen as the El Dorado of the automotive world. Following several years of sharp increases in new car sales that delighted manufacturers, the pace of growth has somewhat slowed. The prospect of double-digit growth in the coming years is no longer a given.

In recent years, the major challenges for auto manufacturers were to turn out enough cars to meet very strong demand and to expand dealer networks to ensure that no sales opportunity would be missed. The situation is now changing, leading to a number of questions:

- Did this crazy trend result in an overproduction capacity in China? How will massive production capacity be managed if the demand in the coming years cannot create "debouches" for each car produced?

- How do we manage imbalances across the country? We do see over-saturation in the biggest Tier 1 cities, and little utilization of road infrastructure in lower tier cities. Urbanism, road infrastructure build-up and maintenance, parking spaces are all critical challenges.

- In a country where environmental protection is identified as a key focus, increased car usage represents a tricky challenge. Efforts to develop and implement relevant electric vehicle and hybrid strategies for China demonstrates to what extent it is a serious concern for different stakeholders involved.

- What will be the future of second-hand cars when cars sold over the last five years are replaced by their owners?

- Will the aftermarket sector be sufficient in quantity and quality to answer the needs of a car population that increases by more than 10 percent every year?

- Will the aftermarket sector be efficient enough to satisfy car owners in terms of quality of maintenance and the service offered?

Obviously, these challenges are not new for manufacturers and other automotive-related sectors in China. Many initiatives are already in place or in progress to address hurdles for a smooth automotive future in China.

That said, challenges remain.

This year in China, more than 90 different car brands are offering more than 470 different models. This is by far the widest choice offered to potential car buyers compared with every mature auto market.

The Chinese driver can choose from Chinese, Japanese, Korean, American, German, Italian and French models. Every car manufacturer, whether Chinese or foreign, wants to be in the China market. Looking back on the 100 years of automotive history, this is the first time a single country has become the focus of so much attention.

Intense competition

An indication of the degree of competitiveness is that the top seller has only a 13 percent market share, compared with 20 percent in the US and as high as 34 percent in Japan. The top five players represent only 37 percent of total sales in China, as against 56 percent in Germany, 70 percent in US and 83 percent in Japan.

Time to innovate with a deeper understanding of consumer needs

If we can summarize the current situation as a relative slowdown in new car sales and the toughest competition ever seen, it becomes evident that one cannot rely anymore on market dynamism to develop sustainable sales. Increasing one's own slice of the cake becomes critical to sustainably. In the first months of 2011, for the first time in a very long time, several car brands are showing decreases in sales.

It means that every car brand has to offer something different, something unique to attract buyers.

The question is: How to be unique and different when each model has to compete with 469 others? The needs and desires of car buyers are complex and multi-faceted. Functionality sits on the surface and emotions lie at the core. All brands must be managed so that they are internally consistent and reflective of consumer needs.

Three major dimensions have to be considered when it comes to uniqueness: the functional needs, the identity needs and the emotive needs.

Functionality relate to the size of the car, the number of seats, the engine power, fuel economy, price, the carriage capacity, and other physical attributes.

Identity relates to the identification of peer groups, the income level expressed by a car and the lifestyle image that the car projects.

Emotional needs relate to feelings, such as adventure, power and caring, and to personal aspirations, such as ambition and individuality.

Most of the time, offering a clear answer to functional needs is pretty clear-cut and achievable.

Some brands on the market already have established their image based on this multilayered structure of needs. However, a majority of the current players have not yet fully developed their reputation and image where car buyers are concerned.

These brands are consequently exposed price pressures. They do not provide reasons to pay more. They do not provide the intangible benefits that make customers prefer a luxury bag to a plastic one - although the end functional benefit is the same: carrying items. Of course, foreign car brands that enjoy a long heritage built in their home countries and their expansion abroad have clear advantages there. However, recent launches of new car brand in mature markets, such as Dacia in Western Europe or Latin America, demonstrate that it is possible to build a differentiating positioning within a short period and attract a significant number of new car buyers.

Taking it to the market

Developing a unique position is a first step; making it clear to potential new car buyers is another challenge.

In that respect, the key factors of success lie in the consistency of the "messages" the brands convey to consumers. Beyond traditional media such as TV, print, radio and Internet advertising, car drivers are exposed to multiple touch points. There is experience in a dealer showroom, the visit to an auto show, the cars seen on the street, Internet forums and word-of-mouth. All contribute to shaping a car's image in people's minds. The consistency of messages pushed across touch points is crucial to ensuring that the message received is unique, loud and clear.

The more competitive the market, the less the market dynamism will be outstanding and the more the differentiation positioning and consistent communication will contribute to or hinder growth opportunities of the nearly 100 brands offered in the Chinese market.

Dismissing these fundamental dimensions or being late in implementing winning strategies will expose car brands to the high risk of disappearing from the Chinese El Dorado.

That won't be good news for new car buyers.