Automotive Refinish Market

October 13, 2005

On a global level, the automotive refinish market has slowed down, and even might be on a small decline. Emerging markets, value-added services and compliant technology offer paint suppliers avenues for growth in this difficult marketplace.

Even as the number of miles traveled by car increases each year, the number of accidents has remained flat. In addition, the number of damaged vehicles being declared total losses is growing. These factors have contributed to a net loss of work for bodyshops, leading to the decline of the collision repair market. This, in turn, has caused the market for repair paint to fall. Not boding well for the automotive refinish market, the decline in the volume of repair work is not expected to halt any time soon.

Another factor contributing to the market's drop-off is the decline of paint volume, which has been falling since 2003. Due to technological developments, less paint is needed to spray a car these days. Furthermore, stricter speed limit checks, heavier drinking-and-driving penalties and the introduction of 'points-based' licenses, have led to a declining rate of accidents in the U.S. and Europe. In addition, car manufacturers and insurance companies are investing in safety equipment and other mechanisms to lower the accident rate further.

While the decline of the mature European and NAFTA markets is substantial, the developing regions of Asia and Eastern Europe offer the brightest market opportunities for automotive refinish manufacturers. "Increasing competition by budget suppliers has led to the introduction of high- and low-end brands by multinationals in order to compete regionally in these less industrialized markets," said Chris Wall, director of global marketing for Akzo Nobel Car Refinishes. "Akzo Nobel Car Refinishes already has a strong presence in these markets and will continue to develop our business there. Some areas like Thailand, China and India are showing impressive growth figures because of a growing car park. In other countries such as Japan and Taiwan the refinish market is only growing with very modest figures."

Recently, Honda Motorcycle and Scooter India Pvt. Ltd. approved Akzo's Lesonal refinish paint for aftermarket painting jobs at its dealer network. This is the first automotive approval in the two-wheeler segment for Lesonal in India.

BASF's Glasurit 90 Line is also forging ahead into the developing countries of Estonia and Latvia. Glasurit importers AP Trading in Estonia and RAGS in Latvia, recently managed to convince the tenth bodyshop in the region to change over to the Glasurit 90 Line.

"Another growth factor," Wall continued, "could come from new ways of conducting car repair. New repair concepts such as 'rapid repair' or 'smart repair' are growing in importance, as they can be a means of attracting new customers to bodyshops."

In addition, due to the economic recession in Europe, many consumers have decided not to repair their car after a minor accident. "It is estimated that over 50% of cars have some kind of un-repaired damage, which has led to a significant drop in the repair rate," said Wall. "Because of higher labor rates in Western Europe, damaged car parts tend to be replaced instead of repaired and refinished. The huge number of un-repaired cars in Western Europe offers great potential."

Environmental legislation and the demand for increased collision center productivity and profitability will continue to be major drivers in the market, according to William Johnston, manager of training and development for BASF's Automotive Refinish Coatings business in North America. "The market is headed towards reduced VOC emissions, enhanced insurance relationships, growing partnerships between collision centers and vendors, consolidation, the need for additional investment in equipment and technology, and greater need for increased output," he said.

According to Johnston, the largest opportunity for growth may come from "non-traditional" segments, such as the commercial transportation segment, custom painting and small-damage repair. "BASF has already taken significant steps to capitalize on these largely untapped areas of the market. On the service side of the business, which is where the most opportunities for differentiation lie, it will continue to grow in importance, as it is a determining factor for collision centers in deciding who to partner with to help ensure business success," said Johnston.


The typical customer base of paint suppliers has evolved. While paint companies are used to having a strong position with individual body shops-which still represent a large customer base-they have now begun to realize that new "customers" are arising, and all have different needs.

Insurance companies today are taking more control of the automotive repair process. As a result, insurers are now customers of paint suppliers too. "The needs of insurance companies greatly differ from individual body shops, as they are more interested in establishing bodyshop networks, controlling repair and claim costs, increasing customer (car drivers) loyalty and maximizing bodyshop capacity," said Wall. "Since Akzo Nobel has great experience with our Sikkens Acoat Selected network, we can help insurance companies with establishing a repair network, monitoring repair costs and quality and continuous training to improve the quality of the total repair process."

Insurance companies are intensifying their pressure on shops to reduce cost and repair turnaround times without sacrificing quality. "Refinish system 'throughput' is becoming a key issue for collision shop owners and managers," said Bill Shaw, director of marketing, PPG Automotive Refinish. "Since faster repair turnaround time is a key contributor to overall customer satisfaction, the quest for faster paint systems and reduced operation cycle times should continue for years to come."

Accurate and efficient color matching is a key element in the repair process. BASF recently released an expanded and updated version of its Glasurit Internet color service.
PPG Automotive Refinish is addressing the productivity issue on several fronts. "Much of our refinish R&D is focused on the development of 'speed' systems and products. This includes a new generation of clearcoats that are superior in terms of clarity and gloss, but they also significantly reduce application and dry times," said Shaw.

PPG has recently introduced DC3000 High Velocity Clear, a "speed" performance clearcoat designed to enhance productivity in air dry and low-bake collision repair facilities without sacrificing a premium appearance or durability. Its fast nine-minute bake time increases productivity and reduces energy costs.

In addition to insurance companies, there are other customer groups that have grown in importance. Body shops continue to consolidate into chains and OEM parties are gaining control over their dealers. In order to fulfill their specific needs, Wall said a paint supplier's portfolio of refinish products and services has become much more diverse.

As a result, Akzo has introduced brands such as Lesonal and Dynacoat, each with a distinctive positioning. The company has also recently introduced Sikkens Autosurfacer Rapid, a very quick primer, which shortens the preparation time in the bodyshop process. Furthermore, the company is launching a UV-based primer and clearcoat system, which offers extremely short drying times with the use of UV-light.

For BASF's refinish customers, increased margin pressures, value-added programs and training are key issues. BASF is addressing these issues in multiple ways, including development of market-appropriate products and streamlined production techniques. "A major need of BASF's refinish customers is optimizing paint products to make the paint repair process more efficient and help repairers be more productive, which ultimately results in reduced costs and helps businesses be more profitable," said Joe Skurka, manager of OEM relations for BASF's Automotive Refinish Coatings business in North America.

"In addition, helping our customers establish profitable relationships with insurers is very important," continued Skurka. Along those lines, BASF has launched business-management programs to address insurance relationships and other crucial management and operational issues. According to Skurka, these new service requirements continue to be in high demand. "Repairers need a host of business management skills and services to help them succeed. We offer traditional instructorled programs, but is also using 'distance-learning' methods via CD and the Internet, to make it easier for those interested to juggle their schedules."

PPG also offers training options available for distributors and end users. "Advanced training also extends to shop management courses geared to owners and managers seeking to improve the efficiency, throughput and quality of their repair process," said Shaw. "PPG's MVP program provides forums across the country for shop owners to meet with peers and industry leaders to discuss every aspect of their business and the best practices for enhancing productivity."

Recently PPG introduced two new productivity-based programs. ThroughPut Solutions seminars demonstrate ways to increase throughput, while reducing defects and eliminating processes that waste time and materials. Performance Power is a multifaceted program that includes technology solutions that can measure and track a shop's repair performance and offers performance-improvement tools and training, according to PPG.


Moving forward, the automotive refinish market will rely heavily upon technological advances to create greater market opportunities. UV-curable primers continue to rise in popularity, creating opportunities for more productive paint shops and there continues to be a growing interest in water-borne basecoat color technology in a number of markets.

Accurate and efficient color matching also remains a high priority for repairers because color-matching services and tools are critical for the success of their business. "Color match and the human involvement in the color process moved forward a long way with the first generation of spectrophotometers such as Automatchic," said BASF's Johston. "However, the color process will move ahead further through advanced technology and we expect to see interesting developments in this area over the next several years."

Recently, BASF released an expanded and updated version of its Glasurit Internet color service. New search functions and criteria now make it easier to find the correct colors for passenger car parts, along with many other features. The online database offers detailed information on 200,000 mixing formulas for the original colors of all car manufacturers.

Accurately matching OEM color standards also remains a top priority at PPG Automotive Refinish. "This includes staying abreast with the OEM's use of new, exotic pigments, such as Xirallic synthetic pearl pigments, and developing new refinish toners to accurately match," said Shaw. "Color variances from OEM standards occur often at assembly plants so providing refinish technicians with tools to match these variants at the body shop is key to helping assure accurate color matches. The PPG Color Variant System, for example, offers hundreds of variant chips, sprayed with actual PPG paint finishes so the color matchers can select the one that most closely matches the vehicle."

In the short term, new VOC legislation effective in 2007 will affect a large number of bodyshops. "They will have to change the way they work, from paint sourcing, to spraying and administrating their VOC usage," said Wall of Akzo Nobel.

To help bodyshops prepare for these changes, major paint suppliers are firmly focused on compliant technology.

Dupont Refinish has launched an updated version of its XK203 Low Emission Activator Fast, which is part of the Dupont Refinish EU Directive compliant product system. The improved activator features even faster through-hardening and curing on all fast repair jobs, helping to improve bodyshops' productivity.

BASF Coatings' Glasurit also offers bodyshops a complete range of products that meet European VOC standards. The latest new product developments to round out Glasurt's VOC System are 285-55 VOC HS VOC Primer Filler black or 285-65 VOC Universal HS VOC Primer Filler white, as well as 923-135 HS Racing Clear VOC 3.5.

"Over half of our customer base has already taken the step to use a complete VOC compliant system," said Wall. "With all the experience we have, we can make the transition for body shops easy, quick and profitable. In the coming period both customers and paint suppliers will be investing a lot of time and money to meet the requirements of the EU VOC legislation-and hence a better environment for us all."

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