Drivers for this market include growth in emerging markets, which can be attributed to a rising middle class with a growing disposable income, an increase in the number of vehicle collisions, growing demand for recreational vehicles and an increase in the average age of vehicles.
However, stringent regulations for VOC emissions and lack of skilled professionals are some of the obstacles facing the global automotive refinish coatings market.
According to Sonali Mazumdar, research analyst at BIS Research, “Clearcoats segment accounted for the largest share of 40 percent in 2016 in the global automotive refinish coatings market, followed by basecoats...In the global automotive refinish coatings market, the solventborne coatings segment accounted for a share of 48.0 percent in 2016.”
AkzoNobel expects the global automotive refinish market to grow by about two to three percent, based on value. “We forecast the largest growth in emerging markets – more than five percent CAGR, while we think mature markets will see a stable growth of one to three percent,” said Doug Holmberg, AkzoNobel business director North America, Automotive and Vehicle Refinishes. “Overall, we see different market dynamics across various regions worldwide. The top four paint companies make up about 75 percent of the global competitive landscape, but there are also many local players, especially in Asia.
Holmberg noted that there are several distinct key drivers for the industry, including the growth of the car park, with tailwinds from emerging markets; accident rates – linked to safety features, ADAS (Advanced driver-assistance systems) and driver experience; miles driven; and repair rates – linked to insurance coverage, vehicle age and consumer behavior.
“Another important industry driver is consolidation, especially in North America, with continuing share growth by the leading MSOs (multi-shop operators), where process efficiency and economies of scale are key,” Holmberg added.
Overall, auto refinish markets around the globe are growing, with differences in each region.
“NAFTA is seeing growth in all regions,” said Joe McDougall, executive vice president and president Global Refinish and EMEA at Axalta Coating Systems. “However, growth in Western and Southern Europe remains slow, while Eastern Europe, China and other emerging markets are doing very well. While it is dependent on the country, there has been growth.”
“Our market is driven by miles driven, disruptive driving habits and weather(ing),” said Denise Jing Lyu, PPG director, Refinish Global Marketing. “We are seeing new car sales increase in the U.S. and Europe but offset by a decrease in Asia. Collision demand fluctuates seasonally but year-over-year we see small increases globally.”
According to MacDougall, refinish is a dynamic market with growth by segment looking very different today than it did a few years ago. “As market growth slows, all markets will determine where the value lies. It will be important for companies in the industry to be productive – in developing new products and creating efficient operations. Market consolidation is happening quickly in all parts of the world and staying on top of this trend is a challenge for everyone in the refinish market. Different countries have different inclinations, which makes managing through this change particularly difficult for a global company. Companies like Axalta will need to remain balanced – focused on the local market while bringing our global technology, supply chain and products to the forefront.”
AkzoNobel sees four major trends in the refinish industry right now – increased repair complexity, new legislation, a change in accident rates and a dwindling workforce. According to Homberg, these trends are significantly impacting the refinish industry right now and can pose both challenges and opportunities.
“For one, as vehicles become increasingly complex, they require more complex repairs, which drive up repair costs. For example, vehicles now often feature new substrates, crash avoidance technologies – such as sensors and cameras – and more digital technology elements. In order to efficiently repair these vehicles, refinish shops need to invest in new technologies,” said Holmberg.
The drive for consumer individualism and the need make vehicles stand out is fueling the growth of more complex OEM colors, such as special effect and high chroma colors. These require refinish shops to have the right tools to create invisible repairs. For example, AkzoNobel offers Automatchic, a digital system that enables body shops to precisely measure and match the existing color on any area of a vehicle.
“Another trend impacting the refinish industry comes from new legislative regulations.
Aggressive CO2 emission reduction policies are resulting in a drive to reduce the weight of new vehicles,” Holberg noted. “This directly impacts the refinish market, as we are seeing more multiple-substrate vehicles (aluminum, carbon, steel, plastic and composites – for example, vehicles with a plastic bumper, carbon wings and a steel roof). Also, tighter VOC legislation in growth markets such as China is requiring refinish shops to reduce their emissions. One way to do this is by cutting back VOCs in automotive refinish coatings through the use of high solids and waterborne paints and coatings.
A third trend identified by Holmberg as impacting the industry right now concerns the workforce.
“We are faced with a serious skills shortage,” he noted. “It has been particularly difficult to attract the next generation of trained professionals into the repair industry, especially in mature markets. If this trend continues it will be increasingly difficult for repairers to deliver quality repairs while maintaining cycle times.
“Finally, accident rates are decreasing,” he concluded. “There are several reasons for this, including multi-occupancy lanes and autonomous vehicles; millennials driving less and questioning conventional car ownership models, and improved road safety and car safety technology coupled with increased driving offense legislation. With the rise of autonomous driving aids, there is also a growing need for surface coatings that can support this technology.”
“Key trends and challenges we see are consolidations among body shops, car body structure and collision avoidance technology,” noted Lyu. “Other areas we keep an eye on are VOC considerations, productivity and color accuracy. PPG automotive refinish offers a variety of products to body shops to meet these needs, and we work closely with OEs on color matching. We have more than 3.5 million formulas in our color database.
“OE certification is most critical from a product perspective. PPG is the leading supplier to the automotive OEM market, and we are the only coatings supplier to supply all global automotive companies,” Lyu added. “OEM certifications help ensure collision centers can refinish vehicles to OEM factory standards. PPG premium refinish systems are officially approved for 98 percent of all OEM makes and models available in North America. The remaining automakers allow the use of PPG products in certified collision programs if a PPG certified painter is on staff.”
Sherwin-Williams stays close to the trends and issues its customers face. “We have observed that the average cost per repair has risen, a result of both the complexity of modern vehicles and the growing costs of new vehicles and their parts,” said Rob Mowson, VP, marketing, Sherwin-Williams Automotive Finishes. “There is local, national and global consolidation, the increasing participation of private equity, as well as influential shifts in the industry from consumers, OE manufacturers and insurance companies.”
Sherwin-Williams continues to assist all of its customers, Independent Repairers, Dealerships and MSOs in their efforts to control costs and improve efficiency by providing them with products linked to proven processes, delivered with world-class service. “Other factors affecting the collision repair market are advanced lightweight materials, evolving customer expectations, advanced crash avoidance systems, and the shifts to transportation as a service,” said Mowson. “There’s a lively debate about these coming influences and the timing with which we can expect them, but we are preparing to meet the needs of the market as they evolve.”
Issue and Challenges
Of concern to all the major players in the auto refinish market is a lack of skilled technicians trained to apply these ever-increasingly complex coating systems and the need to increase efficiency. According to Holmberg, the biggest challenges refinish customers face are related to efficiency and the workforce. “For one, body shops are under pressure to reduce cycle times and total repair costs, while also doing more with the same people and in the same facilities. In order to make the workflow as efficient as possible, shops are incorporating more advanced management tools. For example, our AkzoNobel Carbeat platform identifies the status of a repair at a glance and provides real-time vehicle status information that can easily be shared.
From a product perspective, we continue to work on repair systems that allow our customers to work on fast-curing solutions as well as solutions that allow for ambient curing, which in turn cuts down on spray booth occupancy.”
Another trend is the move toward more custom and complex colors. AkzoNobel continues to support the industry in the complex world of vehicle color through a variety of digital tools. “We recently released new solutions to enable the invisible repair of the newest and complex highly chromatic colors, so body shops can perform invisible repairs on the newest car models,” said Holmberg. “To help body shops solve their color challenges right the first time, every time, our team of experts created a simple digital package. Our Mixit Cloud uses keywords and filters to immediately display an accurate color chip on your screen, and Automatchic Vision uses a hand-held device to digitally analyze color, and software to retrieve the optimum matching color formula.”
Besides efficiency, another major challenge in the refinish industry right now is the need for trained staff. “We are moving more toward blended learning material, where digital sharing is a large part of knowledge transfer and less time in the formal classroom,” said Holmberg. “Digital tools give a more flexible and efficient delivery of information. Physical application training still remains an important component, and we continue to develop our global network of more than 40 Automotive Training Centers (ATC). We are enhancing our training offers by building in ‘experiences,’ such as learning about AkzoNobel’s Color History, and by using Virtual Reality application equipment in select locations.”
According to Lyu, a key issue facing its customers is the shortage of paint technicians. “PPG encourages interest in the industry among young people through supporting educational programs and working with technical colleges and other organizations. PPG partners with many professional educational institutions to provide the highest level of training in North America, including I-CAR Vision, National Institute for Automotive Excellence (ACE), SkillsUSA, British Columbia Institute of Technology (BCIT), a variety of technical colleges and more.”
Collision repair facilities will continue to face a number of competitive hurdles. “We have seen the positive effects of providing our customers with more than just good paint. We know it is imperative to drive solutions that improve productivity and profitability through the reduction of cycle times, implementation of lean practices, and elimination of waste,” said Mowson. “Our success is closely tied to the success of our customers so we don’t hesitate to apply resources that help improve their business.”
“We often think about the body shop but depending on the country you have many more constituents – insurance companies, work providers, collision management companies, and of course distributors, which all have various needs,” said McDougall. “When we focus on paint, the trends remain mostly about productivity in the multiple shop operator and premium space.
Axalta offers the most productive waterborne system in the world, allowing the company to provide innovative products to these customers. Secondly, the trend of growth in the economy segment is moving quickly from China to Latin America. Axalta has grown in South America both organically and inorganically over the past several years. Axalta will continue to focus on all segments, so we can meet customer needs regardless of their coatings needs.”
Sherwin-Williams collaborates with its customers to develop custom solutions based on their specific needs and growth opportunities. “We provide a team of knowledgeable tech reps, field personnel and industry-leading Sherwin-Williams consultants to deliver the on-site expertise and support to help them achieve sustainable efficiency,” added Mowson. “We do this by offering collision repair management and technical application training, shop-specific impact assessments, our famed EcoLean series of production improvement workshops, peer management “Vision Groups” as well as facility design & layout services.”
New Technologies, New Products
Pigment nanotechnology is a big focus in the auto refinish market right now. “This is already in use in some of the more recent colors, and it allows our customers to generate the latest color effects,” said Holmberg. “As autonomous driving technology continues to grow throughout the automotive industry, we continue to research ways that surface coatings can support this technology – both at an OEM level and through the repair of a vehicle with these technologies fitted.”
“Some of the latest technology being utilized in the auto refinish market include nanotechnology to deliver brilliant, high chromatic colors,” noted MacDougall. “Unique polymer chemistry is being used to accelerate curing to improve shop productivity while maintaining exceptional appearance. Lastly, another core technology is ultra-productive waterborne basecoat technology with superior hiding capability.”
Sustainability is a big focus for AkzoNobel. “We continue to grow our sustainability credentials by sourcing raw materials from more sustainable sources where possible. We are also releasing low-energy solutions to enable body shops to dramatically reduce their energy usage – which is good for the body shops’ energy cost and the environment overall,” said Holmberg.
“With the introduction of new substrates and the increased use of vehicles encompassing multiple substrates, we are introducing advanced primer technology as well as technology that is allowing for application on multiple substrates with just one product. One of our newest products is our Autoclear UV, a UV-curable clearcoat. This type of clearcoat – the top layer of an automotive finish— can be cured within minutes after it is exposed to ultraviolet light. This cuts down on time and energy costs, with no compromise on quality. At the moment, we are only offering this product in Europe.”
Axalta’s refinish group has developed color delivery technology for exact color reproduction utilizing Quantum spectrophotometer. Over the summer Axalta sold its 50,000th spectrophotometer. To celebrate this milestone, the spectrophotometer was painted in Starlite – Axalta’s 2018 Automotive Color of the Year.
Axalta's refinish group has also launched Cromax EZ, an easy to use waterborne basecoat technology with superior color capability. Cromax EZ is great for traditional collision shops who need to use water but also want something that is easy to use. The group also launched Cromax Ultra Performance Energy Clear, a high productivity clearcoat with outstanding appearance. Overall, Axalta’s refinish group has continued to deliver innovative products to its customers.
In EMEA, PPG has launched Delfleet One and Turbo Vision product lines for the commercial transportation segment. “These products are VOC compliant and feature great color, as well as easy application,” said Lyu. “PPG has also launched ultra-fast clearcoat finishes in USCA and EMEA, which offer improved productivity and throughput for body shops. Globally, we have launched our next generation of digital color tools to help customers get the best color match.”
This summer Sherwin-Williams Automotive Finishes introduced it Ultra 9K Waterborne Basecoat System. “It is the perfect combination of speed and accuracy, a system designed to deliver quality repairs even at high volumes,” said Mowson. “We wanted this system to be a true change for the industry. We rethought everything to make sure that the entire shop experience is best-in-class.”
The Ultra 9K system formulation delivers precise and quick color matching, from mixing to spraying, with intuitive color software and spectrophotometer. Ultra 9K utilizes the latest effect pigments in thousands of color formulas to match the latest OEM styling trends and to achieve outstanding appearance. Globally compliant, Ultra 9K is formulated for consistent performance and superior quality in variable climates. It has proven performance and application characteristics, from superior hiding and blendability to a true wet-on-wet application. This makes the system a leading solution for improving cycle time and maximizing throughput, according to the company.
Sherwin-Williams’ recent acquisition of Valspar and its numerous refinish brands, has been a potential game-changer in the refinish marketplace. “We believe we bring increased value to the industry through the combination of our two organizations,” said Mowson. “This value is driven through the integration of complementary businesses and by the synergies, we gain from the enhanced R&D capabilities. We also contribute exceptional combined talent and an extended geographic reach. As one company we can get even closer to our customers, understanding their needs to find innovative solutions that address those needs while preserving natural resources and protecting the planet. All this provides us the opportunity to further deepen our relationship with our customers – from distributors to collision shops - and to collaborate for the benefit of the industry.”