Coatings World - March 2008

compete with established OEMs in the established markets.

“To compete in emerging markets, many established OEMs are bringing a new value proposition to the new middle and upper class in these countries, which drives the need for world standards,” Fischer continued. “Emerging markets are no longer simply a market for low cost, utilitarian vehicles. This growing demand for world-class quality is creating the opportunity to export technology from established markets to emerging markets and includes automotive paint. To be competitive and stay ahead, technology know-how and production must be transferred to the emerging market regions.”

Both OEMs in mature and emerging markets have come under increasing pressure to cut costs in order to compete. While OEMs in mature markets are striving to compete with OEMs in emerging markets, OEMs in emerging markets are attempting to preserve their low cost advantage over OEMs in mature markets.

In the mature markets, there has been an increased demand for more environmentally responsible technologies. Companies such as PPG have been focused on delivering coatings solutions that help automakers reduce greenhouse gas emissions, lower energy consumption, decrease waste generation and conserve water usage. “Moreover, there has been a growing trend toward cus-tomization, as OEMs have sought to differentiate their product offerings in an increasingly crowded marketplace,” said Cheung. “This has led to the ongoing development of specialty OEM coatings such as low gloss coatings and special effect coatings that have greater resonance with consumers.

“In the emerging markets, greater emphasis has been placed on improving product quality,” Cheung continued. “As such, it has become incumbent upon coatings manufacturers to engender the efficient transfer of technology expertise to emerging regions.

To participate in industry growth in the future, automotive coatings companies must have capability in the emerging regions, stated Fischer. “This includes an investment in infrastructure and the transfer of technology and people. To spread risk, it is essential to have a broad portfolio of customers and proper investments in product development, approvals and relationship building. In order for this to happen it is essential to achieve productivity in established markets to fund expansion into emerging markets, offset inflation and maintain profitability when the established markets are not expanding. It is also important to manage change which may be required due to new legislation.”

“Those coatings companies truly devoted and committed to the auto OEM market must be global in supply and regional in attitude. While this sounds trite, it is something they must do,” said Phillips. “For example, they will

have to supply Ford in every corner of the globe. They must be omnipresent across all boundaries and become both the maintainer and the innovator in side-by-side design capabilities within each of the OEM’s engineering and design studios. Paint cannot be allowed to slip any further into the commodity bin in the minds of the OEM designer. Paint formulators needs to show how important a proactive relationship is with the designers.” CW

POTENTIAL OF AUTOMOTIVE-RELATED
COATINGS IN CHINA

Information Research (IRL) has published a new study covering the Chinese industrial coatings sector, entitled “Potential of Automotive-Related Coatings in China.” This new study provides a characterization of the Chinese industry and markets for automotive OEM coatings, refinishes, powder coatings and plastic finishes.

Chinese vehicle production more than doubled over the period 2001-2005 but vehicle ownership in China has not quite managed to accomplish the same feat. The chart below illustrates current and projected vehicle ownership in China.

Future growth in the Chinese automotive sector will be influenced by government initiatives on fuel consumption, which will prompt replacement of vehicles; increasingly liberal currency and credit policies; popularity of small-capacity vehicles; and rising affordability as low-end vehicles are put within the grasp of more of the population.

The automotive sector is also the second largest consumer of coatings for plastics in China, whose spread of applications is best illustrated in the chart below.