Automotive Paint and Coating Industry in China

The Chinese automotive paint and coating industry registered one of the steepest jumps in production and consumption in 2023 in nearly a decade. The country’s automotive paint and coating industry registered a jump of more than 12% during 2023, on account of vibrant growth in Chinese automotive production. Coatings World presents an overview of Chinese automotive paint and coating industry in 2023 in this feature.

A Bumper Year for Automotive Paint and Coating Producers in China

For automotive paint and coating producers in China, 2023 was one of the best years in recent years. Chinese automotive paint and coating producers reaped rich dividends of explosive growth registered during the year. 

Estimated at about 41 billion Yuan at the end of 2023, the Chinese automotive coating sector comprises of more than 300 large-, mid-sized and small-scale producers. The country’s automotive paint and coating sector registered a quantum jump of more than 12% in the past year after two lackluster years.

Foreign multinational paint and coating producers currently account for more than 50% of the market share in the Chinese automotive coating industry. Major companies, namely PPG, BASF, Kansai, Nippon Paint, Axalta, and KCC, are some of the leading producers and suppliers of automotive coating products in China.

Surging automotive production in 2023 helped China-based automotive paint and coating producers register record production numbers. The country’s car output exceeded 30.16 million units in 2023, exceeding the previous high of 28.6 million units in 2017. Output was up 11.6 percent year-on-year, and sales exceeded 30.09 million units, up 12 percent, according to data from the China Association of Automobile Manufacturers (CAAM). Both output and sales set new records. China’s total auto exports hit 4.91 million, up a whopping 58 percent year-on-year, according to CAAM’s data.

According to Cui Dongshu, secretary-general of the China Passenger Car Association, “The total output and sales figures set new records and also represented the new space for development, which has increased our expectations for market growth and the potential for promoting consumption.”

Currently, there are about 240 automobile manufacturers in China, of which about 20% produced less than 1,000 units in 2023, and about 17% of them are expected to produce less than 10,000 units annually. On the other hand, nearly 15% of factories had a capacity utilization rate of more than 95% in 2023, and their total output accounted for 47% of 2023 total output.

The Chinese automotive paint and coating industry has traveled a long road since 1960s when first automotive paint plant was set up in the country. Starting from almost at the bottom of the pyramid sixty-five years back, the country boasts of being the largest automotive paint and coating producer on volume basis.

“At a time when the country’s architectural paint segment is facing growth pangs due to crisis in real estate industry with a wave of defaults involving key developers, a healthy automotive paint sector is playing a key role in driving the country’s overall paint industry,” a key executive from one of the key automotive paint producers Guangzhou Kingwings Technology Co., Ltd. told Coatings World on the condition of anonymity.

Nipsea Group, parent company of Nippon Paint China, has brought a new production plant online with an investment of 960 million yuan ($133 million) in Tianjin in June.

The Singapore-based company’s Tianjin plant will focus on producing industrial coatings to meet surging demand from China’s automotive sector. Nippon Paint China currently runs 70 plants with around 11,000 employees across the country.

Wee Siew Kim, CEO of Nipsea commented in a press release issued by the company, “While we are currently strong in the automotive segment, this sector is undergoing significant changes. For instance, electric vehicles currently constitute a fraction of total car sales, but this is expected to increase dramatically between 2030 and 2040 as gasoline-powered vehicles decline. Moreover, hybrid vehicles are also gaining in popularity. Currently, China is the largest EV market globally and is home to some of the world’s leading EV manufacturers.”

Another leading automotive coating supplier, BASF Coatings (Guangdong) Co., Ltd., expanded the production capacity of automotive refinish coatings at its coatings site at Jiangmen, in Guangdong Province in South China in 2022.

With the completion of the expansion, BASF’s annual production capacity of automotive refinish coatings increased to 30,000 metric tons. This is in line with the company’s strategy to maintain customer proximity, as well as to strengthen its position as a leading and innovative coatings supplier to the automotive industry in China.

Focus on Premiumization

The Chinese government has made it a key policy priority to strengthen the country’s grip on manufacturing by moving up the industrial value chain, thereby elevating Chinese companies globally. Automotive paint and coating production is no exception.
Automotive paint and coating producers are increasingly emphasizing high value added products, and consumption of these value added products has grown far more than the average growth of the automotive paint and coating industry during last few years.

Rising disposable income of a vast section of the population has made premium automotive models popular in China, which has pushed the sales of premium automotive coating products to higher levels in China during the past two decades.

Structural Changes in the Chinese Automotive Coating Industry

The past few years have seen a lot of interest and sizable production of new energy vehicles in China. These vehicles have become popular at the expense of internal combustion engine vehicles.

Though specifications of coating products used in the new energy vehicles are quite similar to those used in ICE vehicles, emergence of new automotive producers in the new category is leading to structural changes in the Chinese automotive coating industry.