Globally, the automotive industry is a key economic sector. While automakers continue to trim costs throughout the production process, automotive OEM coatings manufacturers continue to evolve to meet the demands of the market. Overall conditions in today's automotive OEM coatings market are challenging as paint companies continue to face unprecedented raw material price increases and price-down expectations from all OEM automotive manufacturers.
While North America and Western Europe still represent approximately two-thirds of the global OEM market, activity in these markets remains relatively flat. The head of Nissan Motor Co., Carlos Ghosn, told the Associated Press that the U.S. auto industry is in recession. U.S. car and truck sales totaled 16.1 million vehicles in 2007, down from 16.6 million the year before, according to Autodata Corp., the worst performance since 1998, as rising gasoline prices and declining home values have hurt consumer confidence.
While the mature markets of North America, Western Europe and Japan remain stagnant, the automotive markets in China, South East Asia, India and Eastern Europe, especially Russia, continue to expand. The AP reported that the Russian market expanded 25% last year with China just below that, and that Russia will surpass Germany in the next two years as Europe's largest auto market. As production capability and the level of quality grows, these markets are becoming strategic for export production for many global OEMs and cannot be ignored. As the economies in such developing parts of the world continue to grow, wages are expected to increase, allowing more consumers the opportunity to purchase vehicles.
When it comes to paint companies considering where to invest their dollars for growth, there is really no choice but to look towards these emerging markets.
As always I welcome your comments and suggestions.