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Brazil’s Auto Industry Draws OEMs and Axalta Investments

A record for 2013 production by Brazil’s automotive industry is encouraging billions of dollars of new OEM investment in the country.

By Charles Thurston, Latin America Correspondent

Published March 24, 2014
A record for 2013 production by Brazil’s automotive industry is encouraging billions of dollars of new OEM investment in the country, along with new investments by paint and coatings manufacturers that supply the segment. Production in 2013 was up 9.9 percent to 3.74 million units, compared with 3.4 million the year before, according to the Associação Nacional dos Fabricantes de Veículos Automotores (Anfavea), the national auto manufacturers association, in Sao Paulo.

This production level created a demand of $280 million for OEM automotive paints and coatings and $365 million for the automotive repair market out of a total of $4.28 billion in sales for all segments last year, reckons the Associacao das Fabricantes de Tintas (Abrafati), the national paint and coatings manufacturers association, also in Sao Paulo.

Among the most recent announcements of new paints and coatings investments in Brazil was that of Axalta, which reminded the industry that it is in its third year of a $32 million investment in its Guarulhos, Sao Paulo state factory complex. The company plans to double its OEM waterborne production volume to 4.5 million liters or 1.2 million gallons, with the new capacity expected to be on line next year. Axalta now provides the paint for one in two new cars painted in Brazil, according to the company’s Latin America Regional president Jorge Cossio, based in Tlalnepantia de Baz, in the State of Mexico. Additional investments will bring the company’s five-year total to $50 million by 2018, according to a press statement by Antônio Carlos de Oliveira, Axalta’s president in Brazil.

Cossio commented on plans for further investments saying, “In Brazil, we see a need for more investments in other segments we serve, including repainting, industrial, and transportation – including the rail, truck and bus markets.” Regionally, the company also plans new investments. “Our revenues doubled over the past ten years and our current goal is to double them again in the next five years,” he said. “We will continue organic growth but also pursue opportunities in acquisitions and associations across the region. One-third of our corporate investment is now targeted in Latin America,” he adds. “As a privately-owned company we will reinvest in our own company and seek out additional financing if we need it.”

Axalta CEO Charlie Shaver was quoted in Sao Paulo in September saying that the company was studying new acquisitions in the Latin American region that could double its revenue base there to $1.5 billion by 2018.
In the industrial segment, Axalta’s Nap-Gard fusion bonded epoxy powder coating has been certified for pipe coatings across the region, and the company also is expanding in appliances and in energy applications, like wind power. In power industries, the company’s Voltatex electrical coatings resins are being used to cut weight and enhance performance, Cossio noted. Industrial and automotive refinish customers also will see upgrades to the company’s training centers in the near future, Cossio added. Axalta now has seven manufacturing centers in Latin America and approximately 2,400 employees, apart from its broad network of research and development and training centers.

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