Charles W. Thurston, Latin America Correspondent08.13.24
BASF is building up its e-commerce platform for flagship architectural paint line Suvinil at the same time that it is phasing out OEM automotive coatings in the Southern Cone of South America.
While the company will end OEM paint and coatings production in Argentina and Brazil by mid-2025, it will continue to manufacture products for after-market coatings in the region.
The Brazilian OEM segment is worth more than $350 million and will grow by nearly 5% to nearly $450 million by 2029, according to a report by Mordor Intelligence. The analysts ranked BASF as third in the Brazilian OEM market, following AkzoNobel and Axalta.
The wind-down will affect BASF’s Demarchi plant in São Bernardo do Campo, Sao Paulo state, as well as the Tortuguitas plant in Buenos Aires Province, according to the Associação Brasileira dos Revendedores de Tintas (ABRART), the Brazilian association for paint resellers.
BASF had previously announced plans for some Argentine production to migrate to Brazil, due to the slow economy in Argentina over the past few years. In a brief statement, BASF indicated in March that “The decision is the result of an in-depth analysis of businesses and production locations at global and regional levels,” according to a report by AutoData.
BASF announced that it “will continue to serve the automotive industry with a focus on automotive refinish solutions, engineering plastics, functional foams and additives for fuels and lubricants, among other products,” ABRART reported in March.
The Tortuguitas plant will continue to operate BASF’s Argentina automotive refinish division, as well as the Refinish Competence Center (RCC) training center, and other chemical product, administration and service activities.
In 2023, the Brazilian paint and coatings market grew by 3.4% overall, while the refinish market grew by 2%, according to a February report by Abrafati. The expectation for 2024 growth at that point in time for combined segments was up to 2.5%, the association projected.
The automotive refinish market in South America is calculated to represent about 5% of the global market, which will grow by 4.6% to $12.8 billion globally, according to a report by IndustryArc. The primary materials include polyurethane, alkyd, acrylic, epoxy and other resins for refurbishing, repairing the automotive vehicle components and covering from damages, the analysts said.
The refinish market is driven by a booming used car market in Brazil estimated at nearly $152 billion this year, and expected to reach nearly $198 billion by 2029, expanding at a compound average growth rate of greater than 4% during the forecast period 2024-2029, according to Mordor.
BASF is ranked as the second-largest producer in the global refinish market, following AkzoNobel, and ahead of PPG, IndustryArc suggests.
In Argentina, BASF’s Glasurit developed a high-tech training center for the automotive refinish market in May 2023. The Refinish Virtual Centre Glasurit is a 360° platform that offers customers an interactive digital approach to the brand. Participants in the center can schedule appointments with technical advisors from different locations on the continent, the company notes.
"With the Refinish Virtual Centre Glasurit we want our customers to have the possibility of having all our innovative tools in a very simple and easy to access way. This was a regional development in South America that we started during the pandemic and it took us two years," said Sofia Kandraski, marketing and project manager of BASF's Automotive Refinish division for Latin America, in a company statement.
In the midst of BASF’s segment rebalancing, the company “will continue to be the main production, logistics and research and development site for decorative paints, marketed under the Suvinil and Glasurit brands and the business will continue to operate normally, without changes,” ABRART reported.
The architectural paint and coatings market in Brazil represents more than 80% of national production, followed by industrial coatings at over 10%, Abrafati reckons.
To help with the e-commerce program, Suvinil tapped Vurdere to provide Search Engine Optimization (SEO) services, culminating in a record 15,000 daily impressions during the first quarter of 2024, compared with just over 300 daily impressions in the year-earlier quarter.
Vurdere utilized Google Search Console to track the changes in viewer impressions. The company estimates that the average cost per click (CPC) of $0.12 in the paint industry, or a cost per thousand impressions (CPM) of $2.30, citing the SimilarWeb platform.
The SEO project is helping augment Suvinil online sales, which roughly doubled over the past five years to $26.6 million in 2023, according to an estimate by e-commerce analyst ECDB.
The movement toward online shopping is also expanding the used car industry in Brazil, where one in four inhabitants owns a car.
“Technological advancements, notably the internet's evolution, the adoption of e-commerce platforms, and the incorporation of hybrid and electric vehicles have significantly altered the customer's landscape within the used car market. Online technologies empower customers with comprehensive insights into a vehicle's attributes, encompassing aspects such as residual value and third-party profit margins,” Mordor suggests.
“It is a technology that, for the time being, we only have in Brazil; now it is being evaluated to be scaled up to other plants, which we are very proud of,” Allemann said in the interview.
The reformulation of both the Suvinil and Glasurit lines eliminated additives that had been used to improve the dispersion and stabilization of the paint, Valor reported. The end result was a margin improvement of between one and one-and-a-half percentage points, the interview revealed.
Apart from reformulation evolution, Suvinil helps guide decorator color selection through its annual Suvinil Revela 2024+ survey of trends and colors, now in its 15th edition. This year’s survey, titled Chromatic Intelligence, identified “a light blue tone, called Comfort, as the color of the year, accompanied by 29 other colors divided into five palettes that reflect this search for balance, constancy, connection and creativity,” the company says.
BASF has nearly four decades of experience in restoring native forests in the Atlantic Forest. Through the Mata Viva (Living Forest) program, an initiative led by BASF and Fundação Espaço ECO, the company had planted more than 1.25 million native Atlantic Forest seedlings by the end of 2020.
While the company will end OEM paint and coatings production in Argentina and Brazil by mid-2025, it will continue to manufacture products for after-market coatings in the region.
The Brazilian OEM segment is worth more than $350 million and will grow by nearly 5% to nearly $450 million by 2029, according to a report by Mordor Intelligence. The analysts ranked BASF as third in the Brazilian OEM market, following AkzoNobel and Axalta.
The wind-down will affect BASF’s Demarchi plant in São Bernardo do Campo, Sao Paulo state, as well as the Tortuguitas plant in Buenos Aires Province, according to the Associação Brasileira dos Revendedores de Tintas (ABRART), the Brazilian association for paint resellers.
BASF had previously announced plans for some Argentine production to migrate to Brazil, due to the slow economy in Argentina over the past few years. In a brief statement, BASF indicated in March that “The decision is the result of an in-depth analysis of businesses and production locations at global and regional levels,” according to a report by AutoData.
Refinish Segment Larger than OEM Automotive
In shifting focus from the OEM segment to the refinish segment, BASF is targeting the larger market. The OEM segment represents about 2% of total Brazilian paints and coatings, while the refinish segment represents more than 4%, according to the Associação Brasileira dos Fabricantes de Tintas (Abrafati), the national paint and coatings manufacturers association, based in Sao Paulo.BASF announced that it “will continue to serve the automotive industry with a focus on automotive refinish solutions, engineering plastics, functional foams and additives for fuels and lubricants, among other products,” ABRART reported in March.
The Tortuguitas plant will continue to operate BASF’s Argentina automotive refinish division, as well as the Refinish Competence Center (RCC) training center, and other chemical product, administration and service activities.
In 2023, the Brazilian paint and coatings market grew by 3.4% overall, while the refinish market grew by 2%, according to a February report by Abrafati. The expectation for 2024 growth at that point in time for combined segments was up to 2.5%, the association projected.
The automotive refinish market in South America is calculated to represent about 5% of the global market, which will grow by 4.6% to $12.8 billion globally, according to a report by IndustryArc. The primary materials include polyurethane, alkyd, acrylic, epoxy and other resins for refurbishing, repairing the automotive vehicle components and covering from damages, the analysts said.
The refinish market is driven by a booming used car market in Brazil estimated at nearly $152 billion this year, and expected to reach nearly $198 billion by 2029, expanding at a compound average growth rate of greater than 4% during the forecast period 2024-2029, according to Mordor.
BASF is ranked as the second-largest producer in the global refinish market, following AkzoNobel, and ahead of PPG, IndustryArc suggests.
In Argentina, BASF’s Glasurit developed a high-tech training center for the automotive refinish market in May 2023. The Refinish Virtual Centre Glasurit is a 360° platform that offers customers an interactive digital approach to the brand. Participants in the center can schedule appointments with technical advisors from different locations on the continent, the company notes.
"With the Refinish Virtual Centre Glasurit we want our customers to have the possibility of having all our innovative tools in a very simple and easy to access way. This was a regional development in South America that we started during the pandemic and it took us two years," said Sofia Kandraski, marketing and project manager of BASF's Automotive Refinish division for Latin America, in a company statement.
Optimizing Online Architectural Paint Marketing
Leading BASF’s paint and coatings business in Brazil, the Suvinil line of architectural paints registers annual sales of between $100 million and $200 million, according to SimilarWeb.In the midst of BASF’s segment rebalancing, the company “will continue to be the main production, logistics and research and development site for decorative paints, marketed under the Suvinil and Glasurit brands and the business will continue to operate normally, without changes,” ABRART reported.
The architectural paint and coatings market in Brazil represents more than 80% of national production, followed by industrial coatings at over 10%, Abrafati reckons.
To help with the e-commerce program, Suvinil tapped Vurdere to provide Search Engine Optimization (SEO) services, culminating in a record 15,000 daily impressions during the first quarter of 2024, compared with just over 300 daily impressions in the year-earlier quarter.
Vurdere utilized Google Search Console to track the changes in viewer impressions. The company estimates that the average cost per click (CPC) of $0.12 in the paint industry, or a cost per thousand impressions (CPM) of $2.30, citing the SimilarWeb platform.
The SEO project is helping augment Suvinil online sales, which roughly doubled over the past five years to $26.6 million in 2023, according to an estimate by e-commerce analyst ECDB.
The movement toward online shopping is also expanding the used car industry in Brazil, where one in four inhabitants owns a car.
“Technological advancements, notably the internet's evolution, the adoption of e-commerce platforms, and the incorporation of hybrid and electric vehicles have significantly altered the customer's landscape within the used car market. Online technologies empower customers with comprehensive insights into a vehicle's attributes, encompassing aspects such as residual value and third-party profit margins,” Mordor suggests.
Simpler, Greener Production Practices
Another program underway within the architectural production lines in Brazil is a reduction of the number of ingredients, along with an estimated reduction of BASF’s carbon footprint by two-thirds, according to a Valor magazine interview with Marcos Allemann, the company’s vice president of decorative colors for South America, in April 2023.“It is a technology that, for the time being, we only have in Brazil; now it is being evaluated to be scaled up to other plants, which we are very proud of,” Allemann said in the interview.
The reformulation of both the Suvinil and Glasurit lines eliminated additives that had been used to improve the dispersion and stabilization of the paint, Valor reported. The end result was a margin improvement of between one and one-and-a-half percentage points, the interview revealed.
Apart from reformulation evolution, Suvinil helps guide decorator color selection through its annual Suvinil Revela 2024+ survey of trends and colors, now in its 15th edition. This year’s survey, titled Chromatic Intelligence, identified “a light blue tone, called Comfort, as the color of the year, accompanied by 29 other colors divided into five palettes that reflect this search for balance, constancy, connection and creativity,” the company says.
Sustainability at the Forefront for Suvinil
One standout environmental project conducted by Suvinil is the nurturing and preservation of the Suvinil Reserve, a 75 acre green zone connected to the Atlantic forest of Serra do Mar, and part of the São Paulo Green Belt Biosphere Reserve, internationally recognized by UNESCO.BASF has nearly four decades of experience in restoring native forests in the Atlantic Forest. Through the Mata Viva (Living Forest) program, an initiative led by BASF and Fundação Espaço ECO, the company had planted more than 1.25 million native Atlantic Forest seedlings by the end of 2020.
