The auto refinish market continues to perform sluggishly in mature markets like North America. However, growing affluence and an increase in car ownership in emerging regions, has given the auto refinish market a much-needed boost.
“The market is flat to declining in North America while growing in developing regions like Asia and South America,” said Victoria Manea, market development manager, dispersions and pigments, North America, BASF. “In these latter regions, the higher consumer spending power and standards of living have led to an increase in car ownership which, combined with poor quality roads and frequent traffic accidents, are causing a boost in the refinish market.”
“Ever since the financial crisis of 2008, we’ve been confronted with a challenging market for our business and we expect it to remain pretty flat for the foreseeable future,” said Kerstin Stranimaier, marketing director, AkzoNobel. “When we look at individual markets, there are however plenty of opportunities. No one is going to complain about safer cars and fewer accidents, but those positive developments do of course affect our business, especially in our more established markets like Western Europe and North America. Still, China, even with somewhat slower growth in the last six months or so, remains a rapidly growing market, India is showing great promise, South America is growing, and we also see strong growth in Eastern Europe.”
Strainimaier reported that there has been huge growth in the “mid-market” – billions of people emerging from poverty and seeking to join the middle class. “That’s where most of the growth in the developing world is coming from, and that is going to remain a fact of life for the next 30 or 40 years,” she added. “We estimate that 3 to 4 billion people will become active consumers over that period of time, and so we’ve got to tailor our products to meet the demands of that huge emerging market. Many of our own products are aimed more at the higher end, so for us, a challenge is to deliver the kind of quality and performance which has been our strength, but at a price that is affordable to these new consumers.”
According to David Brunori, executive vice president and general manager at Matrix System Automotive Finishes, the economy and distribution consolidation continue to drive declining to flat markets in the NAFTA and EU regions. “However, these conditions have strengthened the position for value paint lines,” he added. “A growing demand for Tier 2 paint lines will continue to be a factor in the NAFTA and EU regions for years to come and ROW interest continues to grow as well. Matrix System Automotive Finishes has been the leader in Tier 2 paint lines for decades.”
“Consolidation has been a talking point for many years, however the last two years have seen the most activity,” said Brunori. “Several major and many smaller acquisitions have changed the dynamics of the industry at the street level and we anticipate a lot more consolidation at the jobber level throughout this year. The organizations’ reputation and relationships will become vital as we move forward. Bottom line is people want to do business with people they trust.”
Sustainability, low VOC and other environmental issues will continue to be important issues for auto refinish manufacturers.
“Market trends observed are toward water-based technology for basecoats and low VOC in general,” said Manea. “Most important market needs are for sustainable technologies and processes that enable increased productivity: quick to apply, clean sustainable and easy to apply.”
“I don’t think it’s possible to overestimate the importance of waterborne technologies,” said Strainimaier. “A few years ago, there were doubters, but we’ve achieved critical mass now, and the whole industry in Europe and North America is changing over. We are continuously improving our waterborne systems – most recently with a new generation that you see in our upgraded Sikkens Autowave products.”
“It’s obvious that sustainability will continue to be a priority in the marketplace,” added Strainimaier. “Customers want improved health and safety; they want to create more pride, satisfaction and loyalty; they want to use less energy and carbon, less water and create less waste; and they want smart facility planning and design. Because by doing so they will grow sales and improve their profit margins. And we’re there to help them achieve these goals. With our sustainable value proposition we help to “future-proof” our customers’ businesses – body shops and repair specialists. We find, by the way, that a lot of work providers – insurance companies and fleet owners, for example – share our values.”
Regulatory topics will continue to gain momentum in many parts of the U.S., according to Brunori. “The VOC changes in Canada, the addition of several air quality districts in California, and activities around Lake Michigan (LADCO) and the Northeastern region (OTC) indicate the commitment to reducing VOC emissions,” he said. “There are several techniques to comply with the lower basecoat VOC limits – either water-based or solvent-based. Matrix System offers both technologies; Aqualution waterborne or MPB-LV solventborne basecoats. Our development chemists are working on new hybrid technologies to ensure compliance for many years to come.”
“Our chemists are diligently working on advanced crosslinking platforms for the future topcoats and undercoats,” said Brunori. “Advancements in pigment dispersion technologies and waterborne resin platforms are always of interest to our formulators. The goal is to continue to bring value and technological advancements at the same time to our customers. This theme resonates throughout our organization.”
While meeting environmental regulations is certainly one of the most important issues, meeting customers’ needs at a reasonable price is equally important.
“Lower/unstable demand in certain regions of the world has made customers more cautious with respect to inventory management (destocking),” said Manea. “BASF sees this as an opportunity to engage our customers to understand the specific demands that they are facing and construct programs to assist them.”
According to Brunori, the key issue for many refinish customers is price point and quality. “Value paints are the fastest growing market segments that our industry has ever seen,” he added. “Customers are demanding a lower price alternative without sacrificing color match or performance. There are more Tier 2 paint companies in our industry than ever before; with more entering the U.S. market from around the world each year. Economic pressures and quality equal to the major paint manufacturers have accelerated the consumption of these products. Matrix System has provided the industry great products at a value price for many years. Matrix System employees remain well-grounded to our roots and sensitive to the conditions our customers are operating in. Our business model satisfies the market demand more today than it did 30 years ago.”
When it comes to auto refinish, color matching is probably the biggest priority.
“In the end, our customers care about one thing above all – delivering a perfect repair to their customers,” said Strainimaier. “The quality of the products and the efficiency of the processes are absolutely key for them, but the number one priority is to get the color right – color excellence, if you will. We are constantly investing in the technologies and services to make certain they can get it right, and get it right the first time, every time. That’s about databases of colors, and about software and tools. We think the future is with 100% digital systems for color recognition and color formulation. We have those capabilities now, in our Sikkens and Lesonal systems, and we’ve got some key customers who have switched over from the traditional system using color documentation in the form of chips and visual matching to fully digital, with our AM3 spectrophotometer and our color management software.”
Apart from that, AkzoNobel is doing a lot to help its customers with more efficient processes, so that their throughput is higher – which translates to higher profitability. “We do it with support and training, with a real emphasis on partnership,” said Strainimaier. “Customers also are looking at ways to reduce waste and cut energy consumption, and we are trying to respond to those concerns with improvements in products – faster drying, and at lower temperatures.”
AkzoNobel through its Acoat selected program was an early innovator in the area of educational programs related to the business aspects of running a profitable collision repair center. “For approximately thirty years we have provided collision repair centers throughout the world insights about the industry, their respective markets as well as information related to techniques, tools and trends,” said Strainimaier. “Today, we continue that practice with concepts such as Process Centered Environments (PCE) which demonstrates how business productivity along with improved quality and profitability can be enhanced through the introduction of sustainable processes.”
Over the last four years, AkzoNobel has had a partnership with the Vodafone McLaren Mercedes Formula 1 racing team, and some of the spinoffs from that cooperation are now finding their way into its products. “For example, we’ve got a new UV-curable filler that we’re now introducing as Sikkens click&go UV Surfacer,” said Strainimaier. “It’s packaged in an innovative unit that you can effortlessly click on to your spray gun, and it cures in 5 minutes when exposed to UV-A light. So that delivers speed, convenience, performance, low energy consumption – quite a lot of performance in one new product.”
Another spinoff from AkzoNobel is Autoclear Matt 12, a two-pack matting finish consisting of low gloss and semi-gloss components for application over all basecoats. “The customer can control the level of gloss in the product by altering the mix of the two components,” Strainimairer added. “Both of those products are examples of the ‘Creating Together’ theme we’ve featured in our Sikkens global marketing campaign – working with our customers and our partners to develop innovative products and solutions.
AkzoNobel also just broke ground in Changzhou, China for a new manufacturing site, along with office, research, warehousing and support facilities. “It’s one of the biggest investments we’ve ever made, and it will add 25 million liters of production capacity straight away, with the potential to triple that as the market grows,” said Strainimaier. “That’s the real proof of our commitment to the Chinese market. If it all goes according to plan, it will be ready in 2014.”
Matrix System was the first Tier 2 paint company to offer the refinish market an alternative to waterborne basecoats by launching MSB-LV Low VOC solvent basecoat. “Other paint companies scrambled to add this alternative basecoat to their portfolio, which have some deficiencies which included; decreased opacity, difficult to apply, reduction of alternates/variant formulas and minimal use of Xirillic pigments for late model vehicles,” said Brunori. “Matrix System solved all of these issues by launching our MPB-LV “Coast to Coast” Premium Low VOC Basecoat into the market. MPB-LV is a state-of-the-art technology that offers exceptional performance and consistent results similar to that of a national rule basecoat. Our solvent based MPB-LV has made compliance easy by giving our customers a premium basecoat that solve color accuracy problems, no conversion headaches, no equipment upgrade costs, and easy to use. MPB-LV is truly ahead of its time.”
Matrix System also continues to focus on geographic expansion. Its team has increased the sales and field technical staff by 50% over the last year. “It is important that our staff, both field sales/technical and management get at the end user,” said Brunori. “In the end, it is about satisfying the end user and what better way to understand what the market is expecting than building relationships at the most important level, the shop. We are continually searching for ways to bring better performing, cost-effective products that will make our customers more successful and profitable.”
BASF Resins group has two new offerings for the automotive refinish market, in the rapid property development polyol series. Joncryl RPD 950-AC/P and Joncryl RPD 980-B are specialty acrylic polyols with rapid property development for solventborne 2K polyurethane systems. Joncryl RPD 950-AC/P provides a superior balance of early hardness, fast cure and long pot life. The pot life is twice as long as dry through. It is supplied in VOC exempt solvents and can be formulated to VOC of 250 g/l (2.1 lb/gal). BASF also offers formulation solutions for water-based basecoats and primers (Joncryl 1522 and Joncryl 1992).
PPG has a number of new products for the auto refinish market. “PPG’s new ultra fast-drying 2.1 VOC compliant clearcoat, such as Envirobase High Performance EC800, is designed to improve repair performance in diverse repair environments,” said Gareth Hughes, director of technology and global platform marketing, PPG Automotive Refinish. “This new clear can be air dried as fast as it once took to bake a clearcoat finish just a few years ago. One obvious benefit of air dry capability is its ability to reduce the workload on the baking booth, while saving on the energy costs to operate it.”
“We recently launched PET (polyethylene terephthalate) primers in Germany,” Hughes continued. “This new advance that incorporates recycled plastic bottles into our resin systems is part of PPG’s drive to develop environmentally-sustainable products offering significant advantages over existing technology.”
Over the past 10 years, PPG has been significantly expanding its global refinish presence, both from within and through acquisitions. Max Meyer, Orica, ICI Autocolor, Protec and Bonny are just some of the acquisitions that have enhanced PPG’s value proposition for the auto refinish industry.
PPG opens color matching laboratory
PPG Automotive Refinish has opened an automated, technologically advanced, color matching laboratory in Cleveland, Ohio. A formal ribbon-cutting ceremony attended by PPG management and employees took place September 14, 2012. The new laboratory is expected to be fully operational this month.
A new level of precision and efficiency has been developed for the Refinish Color Matching Laboratory the company said. This computer-controlled, high-tech facility marks a significant advancement in the science and art of automotive refinish color matching.
The Refinish Color Matching Laboratory addresses a major challenge the automotive refinish business faces. “The patent-pending system incorporates state-of-the-art equipment and proprietary computer software to quickly produce more formulation measurements, allowing PPG to provide precise variant formulas with operational efficiency,” said John Outcalt, PPG vice president, global refinish. “The facility addresses a major challenge the automotive refinish business faces: the need for collision centers to accurately match the growing number of domestic and import OEM exterior, bumper, accent and underhood colors as well as the increasing number of variations to those OEM standards.”
While an OEM's color code may prescribe a particular paint formulation, the reality is the actual vehicle finish color may differ from plant to plant for any number of reasons. Consequently color variants are always needed.
PPG's laboratory is equipped to produce accurate color formulations through improved processes and procedures it said. Using electronic and scientific methods made possible through state-of-the-art equipment and proprietary computer software programs, the patent-pending automated system is capable of running continuously to produce more color formulations, allowing PPG to provide precise color formulas with operational efficiency. The result: quickly obtaining the right variant and formula the first time. The laboratory's capability also allows PPG to expand its data collection practices, better analyze automotive pigments and explore applicable color formulation opportunities as they occur.
The Auto Refinish Market
The auto refinish market remains flat in North America, but improving standards of living in developing countries are leading to an increase in cars in Asia and South America.
By Kerry Pianoforte, Associate Editor
Published October 10, 2012
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