According to a recent study by TNS Automotive, the world's largest automotive research company, brand commitment in China's new car market has declined from 53 percent in 2004 to 40 percent in 2005. The study attributes this decline to the flood of attractive new models entering the marketplace and the poor performance of the mass market manufacturers in satisfying existing customers.

Consumers' brand choice is invariably driven by their underlying emotional needs, which is particularly relevant in the automotive industry. The marginal technological differences on functional areas like fuel efficiency or engine capacity mean that consumer perception on brands assumes greater importance. In this light, car manufacturers would need to make their brands more emotionally appealing to generate stronger brand commitment. Not surprisingly, luxury brands record the highest level of commitment, with Mercedes and BMW taking the lead. Among non-luxury brands, Nissan and Ford are the leaders.

In the automotive market, 6 need segments are identified. Different segments have different needs in cars. They are Performance—buyers seek freedom and excitement; Status—buyers want to feel successful and respected; Control—buyers want to feel competent; Family & Utility—buyers are motivated by a basic need for transportation and to take care family; Belonging—buyers want to fit in socially and Fun & Adventure—buyers seek fun and adventure.

Findings show that a clear positioning does not necessarily come from the length of presence in the market. For example, some brands are new arrivals in the market, but they have already acquired their clear and unique images, benefiting from an effective branding strategy. On the contrary, some brands have been in the market for a long time, but their positions are rather obscure and weak. Challenges for the latter would be to identify their proper positions in the market and quickly work out relevant strategies.

Neither is the brand position necessarily determined by the brand class or price level. For example, Status segment is not always owned by luxury brands as people would normally assume. Some non-luxury brands are also well matching the needs from Status buyers. Actually, car ownership in china is Status in itself. The need for Status is present across all vehicle segments. This shows that it is possible for all brands to own a corner on consumers' mind.

According to the study, first time buyers accounted for over 80% of total new car purchases in 2005. In particular, small car sales have flourished and their growth is expected to continue, benefiting from steady GDP growth and favorable government policies supporting the development of small cars. Within the small car category, mini cars play an important role as they have grown by nearly 30% in 2005. The study notes that mini car owners are looking for more than a practical family car with good fuel economy and cheap maintenance. They tend to seek vehicles with trendy designs that can deliver a sense of freedom and confidence. Most manufacturers have so far focused on price, but there is also a tremendous growth opportunity for stylish small cars in this segment.