The 2023 Automotive Coatings Market

The automotive coatings market suffered through some difficult times during the COVID-19 pandemic, with customer demand down and supply chain issues upending the auto industry. Even though the pandemic has ended, the economy remains a challenge, and automotive coatings specialists report that they are facing the same issues.

Vincent Robin, global vice president, Automotive Coatings for PPG, noted that throughout 2022, the automotive OEM coatings market continued to face significant challenges, with customer component shortages that wreaked havoc in scheduling along with significant raw material inflation.

“In addition to component shortages, labor challenges impacted our customers’ production plans to a point where the global light vehicle production was only marginally above the level of 2021,” added Robin. “PPG’s focus is on helping customers manage through raw material shortages with our global supply network and our ability to provide innovative products that serve multiple applications.

“Through our OPTIMA SOLUTIONS business, our in-plant technical teams were able to adjust material supply and maintain continuity through disruptions in OEM paint lines during the year. We also advanced our innovation pipeline, with the development of products that serve the battery electric vehicle (BEV) market and products with enhanced sustainability benefits.”

Jeff Jones, vice president, global key account management for BASF, also pointed out that last year was a major challenge for the entire global economy.

“While the automotive industry produced more vehicles in 2022, it was still hampered by supply chain challenges and the shortage of semiconductors,” Jones said. “Unprecedented raw material, freight, packaging, and labor cost escalations created significant financial headwinds and pricing in the industry did not move up sufficiently to compensate this burden.

“Best in class service, quality and supply reliability have always been key strengths of BASF to win in the OEM and Tier markets,” Jones added. “The cost of maintaining such service levels continues to increase as the reliability of build plans remains uncertain. Moving forward, many believe the only way to win in the industry will be to focus on rightsizing.”

Supply Chain Issues Easing for Auto Makers

The COVID-19 pandemic created significant supply chain issues for the auto industry. Perhaps most notably, semiconductors were in short supply due to production and shipping issues, leading to manufacturing shutdowns. This impacted the automotive coatings segment.

The good news is supply chains are moving, with more localized production in the U.S. and Europe coming due to recent legislation, which should ease potential shortages in the future.
Jones said that the semiconductor crisis and other parts shortages led automakers to interrupt their production intermittently, adding that BASF is keeping a close eye on both sides of the supply chain and respond at an early stage.

“The business is still volatile,” Jones added. “Automaker shutdowns have a direct impact on the production of our products, so BASF continuously monitors developments in the market and identified alternatives where possible to counteract interruptions to the supply chain.”

Robin reported that since the start of 2023, the automotive market has experienced some easing of supply chain issues, which should lead to an increase in vehicle production, especially in the second half of the year.

“The flow of materials is improving through our customers’ production facilities, and we see volume increasing, so dealers can improve their inventory positions and fleets can replenish their supply,” added Robin. “There are, however, still challenges that could disrupt this going forward. Recent rises in COVID-19 cases in China are impacting automotive supply chains and are resulting in automotive plants suspending production due to parts shortages.”

Growth Areas

In looking at growth markets, the leading automotive coatings manufacturers point to Asia in terms of regions with the strongest opportunities for growth, and electric vehicles as having excellent potential.

Patrick Bourguignon, director of automotive and specialty coatings at AkzoNobel, noted that the overall market is facing headwinds across the globe, but AkzoNobel still projects growth beyond the global average, predominantly in China and South-East Asian countries.

“When it comes to growth opportunities, we’re focusing on providing additional tools and high-quality technical service to our customers to help them grow their business and drive the automotive coatings industry forward,” Bourguignon added.

“The automotive OEM market in Asia Pacific is still strong and BASF has expanded its capability to stay close to its customers to support them with state-of-the-art coatings technology,” said Jones. “Last year, the company expanded its Automotive Coatings Application Center at the Coatings Technology Center in Mangalore, India. The expansion of the application center is an important addition to serve the Indian market with high-quality coatings solutions and strengthen its R&D footprint in Asia Pacific.”

“The U.S., Canada and European builds continue to be impacted by global supply shortages and the inflationary environment,” Robin said. “In the first quarter of 2023, automotive industry OEM production is expected to be similar to the prior year’s first quarter. However, dealer inventory continues to be less than 50% of typical levels of the past decade.”

Robin also noted that most PPG customers are making massive investments in the development of battery electric vehicles (BEVs).

“PPG is responding to this shift by offering the most comprehensive product offering to our automotive customers and to help them to make the right choices for new coatings technologies in their path towards increased sustainability. But it is not all about technology, it’s about selling more conventional corrosion protection and decorative products to BEV producers,” said Robin. “China is well positioned for growth as it relaxes COVID-19 restrictions. The adoption of BEVs in China is progressing at a faster pace than any other region in the world and PPG is growing with the largest BEV producer in the region.”

Color Trends in Automotive Coatings

When it comes to choosing car or trucks, the selection of colors is a personal choice. Mike Bennett, director, global product management for Axalta, observed that customization and personalization remain major trends with OEMs.

“Consumers want a broader range of color options, and we also see a stronger demand for custom colors,” Bennett pointed out. “The growing trend toward two-tone and multi-tone color schemes remains an interesting topic of discussion. We also see a greater emphasis towards new effect pigments, specifically dealing with hue shift.”

BASF’s Jones observed that the achromatic colors – white, black, gray, and silver – are still the most popular.

“White is a color space that’s associated with safety, while black is associated with stature, especially on premium and performance vehicles,” Jones reported. “Both have timeless beauty and high resale values.

“That said, chromatic colors (orange, yellow, violet, and green, etc.) gained market share,” Jones continued. “Car buyers can choose from more hues and diversity, reflecting a more nuanced color palette and a depth and breadth of color that has developed in the last year or two. Many buyers are looking for a vehicle color that conveys their positivity. Solid effects and added color pearl effects are proving popular.”

Bourguignon reported that designers are looking to replace common high gloss black and chrome looks with real materials or natural look finishes, such as stone, mineral and wood.

“This applies to both vehicle exteriors and interiors,” added Bourguignon. “We’re also seeing that haptics are becoming more and more important.

“AkzoNobel’s 2023 Color of the Year, Wild Wonder, is a good example,” Bourguignon continued. “Inspired by the warm tones of harvested crops, its upbeat glow connects us with nature and creates a sense of energy and positivity. It brings a light and fresh, yet sophisticated, finish to car interiors through a variety of looks, from reflective metallic and textured terracotta, to a smooth, one-layer solution. Overall, there’s a growing focus on sustainability, which also influences design choices that go hand-in-hand with functionality and efficiency. Examples include light and hidden-until-lit effects for both aesthetic and functional reasons.”

Robin said that PPG has a heritage of color development, technical knowledge and trendspotting, not just in the automotive space, but throughout the world of color. This enables the company to identify how emerging global cultural, fashion, political, economic and other trends will ultimately influence color and design in the automotive industry.

“These insights are critical to automotive designers whose companies’ success depends on their ability to anticipate color and design trends several model years ahead of production,” Robin pointed out. “Trends highlighted in PPG’s most recent annual automotive color popularity report are the increasing popularity of grays, blues, greens and violets, with vibrant new colors more likely to debut on sporty models rather than SUVs and pickups.

“From a global perspective, white (35% of vehicle builds) and black (18%) continue to be the predominant choices of car buyers, while demand for greys has increased by 2% in each of the past two years,” said Robin. “Blues remain strong at 8%, while reds dropped to 7% of builds. This was led by a 1.5% drop among North American consumers.”

Robin said that green, with its connection to nature, sustainability and inclusiveness, remains strong worldwide and this will continue to be an important color space for the automotive industry.

“It is also seen as a ‘traffic light’ color, acting as a signal for everyone to go forward – it’s safe and we can trust this color,” he noted. “Green has two directions: One is sporty, fresh and vivid; the other is organic and darker, with deeper tones developed or designed as dark luxury greens yet still with a sporty and fresh attitude.

“PPG forecasters say the influence from nature will also be apparent in silver stylings moving forward,” Robin observed. “Warmer and more organic tones will further reflect current consumer tastes, while also aligning with the highly compatible nature of very light tones, including whites, with new radar and lidar technologies.”

Coatings Performance is Key

Of course, color isn’t the only attribute of coatings for cars and trucks. Performance is also critical. Jones reported that BASF is continuously developing coatings and surface solutions that offer superior functional, economic and environmental performance.

“BASF’s customers are going through a transformation process, with digitization and sustainability playing an important role,” added Jones. “Through intelligent use of data, processes can be optimized, supply chains can be tracked, and products can be used more efficiently. With sustainability, BASF is helping itself and its customers achieve their Net Zero targets to create a more sustainable future.”

“Our customers are increasingly looking for functional coatings that perform and provide solutions in response to the changing way that vehicle interiors are used,” Bourguignon said. “In addition, sustainability is key, which we see, for example, in products made out of bio-based or recycled materials. Colors and finishes not only need to look good; they should also offer functionality, such as heat reflection, being anti-reflective, self-cleaning or antimicrobial.”

Axalta’s Bennett said that sustainability is a major topic and an essential design criterion for customers.

“To that effect, OEMs are also looking at sustainable raw materials,” Bennett added. “Color is another key area that customers seek in terms of performance.”

PPG’s Robin said that the industry continues to prioritize sustainable coatings solutions, including more compact processes technologies and low-temperature-cure products, enabling end customers to reduce their energy consumption on the manufacturing line.

“In addition, we are focused on enabling light-weighting to help OEM customers meet their fuel efficiency targets in internal combustion engines and adequately provide range extension in battery electric vehicles (BEVs). PPG is also delivering adhesive and sealant solutions that manage noise and vibration more effectively in BEV vehicles. These enhance the quality of the cabin environment,” Robin noted.

“Customers look to us to drive product performance through innovation, service and industry-leading knowledge that creates mutual value,” added Robin. “PPG automotive coatings experts are deployed in more than 700 OEM customer facilities to ensure the successful application of our paints, coatings and adhesives and sealants on the production line. This enables us to deliver a comprehensive and consistent value package designed to help OEMs reduce costs, increase productivity, and meet increasing quality and performance targets. It also allows us to introduce new coatings solutions and expands customer access to innovative technologies.

“Customer expectations continue to increase, and the demand for digital tools, and advancements in connectivity, automation, and data have transformed how we work together,” Robin concluded. “Customers are increasingly comfortable – and oftentimes expecting – digital tools that support new ways of working. These digital solutions, including our OPTIMA SOLUTIONS InSites digital platform that can detect dirt on paint lines and optimize inventory, define PPG as a forward-thinking paint manufacturer while simplifying and creating consistent processes with our customers.”

Newest Products for The Automotive Market

To meet the needs of the automotive market, paint and coatings leaders are developing new products for a range of markets.

“Our main focus within the automotive coatings segment is on Tier One suppliers,” Bourguignon said. “We align closely with them on the needs that are mostly specified by the OEMs, such as new colors or substrate developments. Our teams take these requirements into our R&D facilities to make sure we match the expectations of our customers and the OEMs.”

“In close collaboration with our customers, we drive innovation in multiple areas such as color, protection performance, application processes, digitalization, simulation, and sustainability,” Jones said. “Through eco-efficient technologies, we enable our OEM customers to meet their climate protection, electrification and autonomous driving goals while our digital solutions make their operations more efficient by leveraging the full potential of connected data.”

Electric vehicles are a particular area of interest. Bennett noted that Axalta’s AquaEC Flex is a sustainable electrocoat (e-coat) that enables electric vehicle (EV) designs.

“This product cures over a broad range of temperatures while also reducing emissions, eliminating hazardous materials, and enabling water recycling. It also provides an enhanced appearance, better edge-corrosion protection, and increased flexibility,” Bennett said. “With this breakthrough technology, automotive OEMs are enabled to co-produce electric vehicles and standard combustions vehicles on the same manufacturing line. AquaEC ensures that critical areas that carry and protect the battery packs are properly cured with the rest of the body frame. This patented e-coat built with new generation chemistry offers several sustainability advantages compared to previous generation technology, including 60% lower VOC emissions and 15% less energy use.”

PPG’s Robin reported that battery electric vehicles are the new frontier in sustainable mobility.

“Through the science and technology team, based out of the company’s Coatings Innovation Center in Allison Park, PA, PPG is creating coatings solutions for battery pack design focused on performance, safety and manufacturability to enable automotive OEMs and battery and component manufacturers to accelerate the development of vehicle energy storage solutions,” Robin reported.

“With the accelerating growth of the BEV market, PPG has been instrumental in developing many functional coatings for battery packs to improve safety and thermal management,” added Robin. “Our battery pack coatings teams have launched their first production program for battery fire protection (BFP) coatings with Corachar, our leading intumescent coatings. Our Corachar coatings enable the OEMs and the tiers to coat the lids of battery packs with high level of automation and consistency required for the automotive Industry. We are also supplying dielectric powder coatings in battery pack applications. Our proprietary formulation provides exceptional electrical insulation and greatly improves safety by eliminating potential for electrical arcing.

“Within the adhesive and sealant portfolio, we have developed unique battery pack sealers and specialized thermal interface materials to connect cells to modules and packs,” Robin said. “Another key to PPG’s product developments is working with our customers to create application processes to support the transition of coatings application to large-volume applications of packs, modules, and cells. In the past few years, we have continued to develop our application centers around the world to share PPG battery coating solutions for battery electric vehicles. Our newest Battery Pack Application Center will open in Tianjin, China in May 2023.”