While the North America and Western Europe markets remain relatively flat, there is plenty of opportunity for growth in emerging regions such as China, Southeast Asia, India and Eastern Europe.
"The market is to an extent based on the number of cars produced," said David Fischer, marketing manager, DuPont Performance Coatings. "In general global vehicle production continues to increase at a modest pace. Regionally South America and Asia, with the exception of Japan, have been growing at a faster rate than the more established markets of Europe and North America, although all regions are seeing increases."
"In North America and Europe there is very little growth," said Jim Ohlinger, manger, product engineering, decorative coating systems for PPG Industries. "They are very mature markets."
These emerging regions present future growth opportunities for automotive OEM coatings suppliers. Coatings suppliers have long established a foothold in these regions through strategic alliances and joint ventures. "Not only do you need a supply chain to access these markets that is capable of meeting the customer demand, it must be competitive as well," said Fischer.
"For us they are regions of opportunity," said Ohlinger. "PPG has been positioned in these areas for a long time. Having established a number of long term JVs in these areas. PPG has anticipated, and entered these regions to benefit from the growth of these emerging regions."
Pricing pressure resulting from crude oil prices is one of the biggest challenges affecting the industry today.
"All of our coatings are petroleum-based," Ohlinger said. "The overall run up in crude oil prices directly correlates to the price increase for monomers. It is very difficult to pass on these price increases. It is a very difficult situation because our customers are dealing with the same price pressures."
"If you look at traditional OEM suppliers, it is becoming more and more difficult to be profitable due to these increases," Ohlinger added. As a result of this situation he said the biggest area new technologies are focused on are related to the economics of the business. "Also, as a result of rising costs–and in the case of emerging markets, a potential lack of availability of energy–OEM manufacturers are looking for ways to reduce energy consumption," he added.
Automotive coatings manufacturers must continue to evolve in order to thrive in these highly competitive market conditions. "A key for many OEM customers is to offer solutions that result in improving their productivity," said Fischer. "The paint material is perhaps one quarter to one third the cost of finishing. The rest is investment, labor and utilities. Included in this are products that work well under the customers' conditions with consistent quality. For some customers improved product performance in terms of improved appearance and physical properties will be important factors in future decisions. Coatings companies also need to respond to environmental legislation as it evolves."
One way to improve productivity is to reduce the steps, number of ovens and layers in the finishing process. DuPont has launched a number of coatings technologies under this principle. One example includes a wet on wet two tone process at Ford Kentucky Truck to increase capacity and lower the cost of two tone production. Another deals with primer surfacers with improved chip resistance to eliminate the need for an additional chip protection primer. In addition, the company has developed a primerless waterborne topcoat system which is now in place at two Volkswagen facilities. DuPont's EcoConcept primerless waterborne basecoat system was recently launched at VW and nominated for an automotive news PACE award. DuPont's wet on wet solventborne topcoat technology was initially launched with basecoat to primer on two tones and also won a PACE award. This concept is now capable of being used as the main color as well.
BASF Coatings has recently launched a new automotive OEM coating technology. Integrated Process II is a novel, highly efficient coating technology. For the new process, the specially formulated basecoats combine all the functions of the primers, such as stone chip protection and ultraviolet resistance. The new technology meets the standards for automotive finishes with regard to appearance and functionality. For the automotive industry, this means that the coating process is shortened due to the elimination of the primer application section of the paint line and the primer oven. Those primer application facilities that are no longer needed can be used to increase capacity. Advantages of the new system include reduced investment and operating costs, material and energy savings, improved productivity and eco-efficiency.
The new system has been successfully operating and integrated into the Mini production line at the BMW Group Oxford, UK plant. With the new system all of the basecoats used at the BMW Group Oxford plant can be applied.
"With Integrated Process II, automotive paint lines can be streamlined, costs cut and the overall process simplified, even at existing paint lines, and capacity can be expanded without complicated and costly construction projects," said Wolfgang Duschek, project manager, BASF Coatings.
BASF Coatings and BMW Group employees worked in conjunction to develop and implement the project at the Mini plant in Oxford. Integrated Process II has provided the BMW Group with a number of advantages. Using the infrastructure of the plant's primer application areas, which the new technology had rendered obsolete, the plant designers installed a second basecoat/clearcoat line. The goal was to increase production from 200,000 vehicles to 240,000 vehicles per year.
PPG has invested considerable R&D time in developing innovative paint processes. "We are combining traditional layers of the paint system into one, essentially to reduce the number of steps and layers to paint a car," said Ohlinger. "That is one of the most active technologies in development right now."
Another area of interest for PPG is nanotechnology. "We're leading the industry in the use of nanotechnology in clearcoats for scratch resistance," said Ohlinger. "That technology is expanding to other customers and products. That has been a big success for us."
PPG's CeramiClear clearcoat is the first automotive clearcoat to use nanoparticle technology and combines resistance to scratches, mars and acid etch. The patented nanoparticle technology creates a highly cross-linked network at the surface of the coating for superior resistance to damage caused by day-to-day use, car washes and environmental hazards such as acid rain and tree sap.
This technology works with an automotive plant's existing waterborne basecoat, primer and electrocoat layers and can be used with a conventional circulating system. The coating does not increase emission levels or introduce new emissions to the waste stream and can reduce an automaker's total cost by decreasing in-plant damage, buffing and dealership touch-up, according to the company.
To further meet the needs of its customers, PPG developed an aftermarket refinish clearcoat, which provides approximately the same level of protection as the factory-applied CeramiClear clearcoat, for vehicles requiring body repairs.
Another innovative product from PPG is a sprayable polyurea bedliner that was jointly developed with Nissan for its Titan pickup truck. "It is a durable produce that will hold up as good as the rest of the paint system," Ohlinger said. "This was the first OEM capable product."
Automotive OEM coatings suppliers are constantly being challenged to deliver products with a virtual laundry list of demands. Customers want a product that offers a reduction in overall productivity cost, delivers improved scratch and mar resistance and one that also meets regional environmental regulations. This can be a tall order to fill.
"Differentiation is difficult but it can be attained through technology," said Ohlinger. "It will be a continual evolution in the area of cost pressures. We are trying to develop and implement systems that reduce the overall cost of painting a car."
"In emerging regions it is not so much cost of energy, but actual availability," Ohlinger added. "Energy is a huge issue that will drive innovations. The market will have to continue to recognize environmental friendliness in coating systems. The total process of painting the car, cost, environmental friendliness and energy issues will continue to evolve."
Improvements in scratch and mar resistance is an area some OEMs are pursuing. "DuPont offers and sells clearcoats today that show a significant improvement in scratch and mar resistance versus traditional OEM clears," said Fischer.
Environmental issues are very regional and site specific. "DuPont offers products which conform to local requirements such as HAPs, as well as waterborne, solventborne and powder products to meet specific local VOC issues," said Fischer.
Automotive OEM makers are always looking to differentiate and set their vehicles apart from the pack. One obvious way is by developing new colors and effects for the exterior finish. "While not a new idea, this desire will continue to drive the development of new colors and effects into the future," said Fischer.
Another important trend is the "mass customization" of products. "There are more and more choices for customers," said Ohlinger. "This is definitely a mega-trend. Customers will have the ability to choose from a huge variety of options, including custom colors. To differentiate ourselves we have to do it better than anyone else through technological innovations."