Coatings World - October 2014

Auto Refinish Market

Market constriction is happening throughout the entire supply
chain, from manufacturers to distributors, and some organiza-
tions are integrating forward and backward. It is an interesting
dynamic that we understand and embrace. Overcapacity: fewer
collisions and increased ‘totals’ have spurred declines for nearly
a decade. The result is overcapacity – there’s not enough work
to keep the estimated 40K shops alive. Our market is respond-
ing accordingly.”
“Advanced Materials: from the 2015 Ford F-150’s military-
grade aluminum alloy to BMW’s use of carbon fiber and extrud-
ed plastic, our vehicles are changing from chassis to electronics
to finish,” Brunori continued. “This means that shops need to
train their technicians and invest in software and equipment
to fix the newer vehicles. This also means that manufacturer’s
must provide solutions to these new challenges. Our teams of
experienced formulators thrive in this environment and we are
looking forward to the future. Insurer Compensation: the rela-
tionship between insurer and body shop is bittersweet at times.
Shop profits are being squeezed by reduced compensation. QAP
products reduce the impact of shrinking margins to the shop.”
“Workforce: collision repair industry demographics show
that our workforce is aging,” Brunori concluded. “Attracting
younger generations to our industry is difficult – it’s not uni-
versally seen as desirable. Quest Automotive Products active-
ly engages with the upcoming industry talent by reaching out
to vocational schools and working with the Collision Repair
Education Foundation. We do this two ways: 1) in-kind dona-
tions (this year we have already donated over $250,000) and 2)
we created the Artists 4 Education awareness campaign (www.
facebook.com/Artists4Education ).”
Sustainability and the move to water-based technolgies con-
tinues to be a key driver for the auto refinish market.

“A common global trend is the need for increasingly sustain-
able coatings and productive refinish systems,” said Ruess-Saltz.
“Lower VOC coatings and, of course, waterborne are impor-
tant for many customers. Industry consolidation in bodyshops
and among distributors has continued in the U.S. and Canada.
In Latin America we’re using social media to reach more in-
formed customers interested in improved productivity and color
matching. There has also been a growing demand for increased
professionalism among refinish technicians, both to improve
profitability and to meet the technical specifications of more
complex color formulations that, for example, are needed for
composite materials. Axalta’s 45 training centers are gearing up
to meet this need.”
PPG identified a number of key trends impacting the auto re-
finish market: the continuing impact of VOC legislation, lack of
market growth, increased complexity, impact of accident avoid-
ance technology and collision center consolidation.

“From a product chemistry perspective, VOC legislation, both
now in effect and emerging, continues to make its impact on re-
finish and our customers across the globe,” said Outcalt. “The
critical challenge for us manufacturers is to provide the prod-
uct systems that not only meet these sustainability requirements
but also deliver on the high expectations for performance and
color match, from collision shops, insurers and vehicle owners
alike. We’re seeing the proof that our effort is paying off with the
fact that thousands of performance-minded collision centers in
less strictly regulated regions have also adopted our waterborne
basecoat as their go-to system. It’s also interesting to note that we
are now seeing an increased interest for green technology in China
where air quality is a major concern. As the Chinese government
considers measures to reduce solvent emissions, collision repair
shops are readily transitioning to our waterborne technology.”
Slow or no market growth is a compelling trend in developed
countries. “Thus for an individual collision business to get a big-
ger share of the market requires competing effectively against
the competition and offering an edge in performance. Since our
success at PPG Refinish depends in large part upon the success
of our customers, we continue to grow and develop our value
added programs targeted at supporting collision centers in ways
that can help them improve their business,” said Jim Berkey di-
rector, MVP Business Solutions, PPG Automotive Refinish.
“In years to come the impact of technology and genera-
tional change will add some complexity to the repair process
while slowly reducing the available work,” Berkey added.
“Thus shops will need to evolve with training, certifications
and equipment to stay current and relevant. Competition will
only get stronger for share and access to work. The Ford F150
represents the first high volume use of aluminum as OEMs
continue the evolution of lightweight substrates driven by the
need to meet CAFE standards. This evolving technology will
continue to drive complexity.”
“The debate goes on regarding the time frame and poten-
tial impact of accident avoidance technology in vehicles. Most
agree that the combination of this technology coupled with the
changes in driving habits within evolving generations will have
a slow but steady negative impact on the volume of repair work
available in the future and a lessening demand for refinishing
products,” Berkey added.

In North America, consolation of independent shops into national chains is happening at a record pace, and thus having significant impact in the marketplace. “This creates an interesting dynamic around performance within the shops,” said Greg DeCamp, general manager, PPG Automotive Refinish. “Smaller independent businesses must create or maintain a performance advantage to stay competitive when going against a national footprint. The largest MSOs (multiple shop operations) face the challenge of ensuring shop-to-shop consistency in performance and service to retain the sources of work within the shops they acquire. Overall, this trend is sure to demand a lift in service and support from manufacturers and distributors as competition for work intensifies. Accordingly, PPG is strengthening its commitment to the independent distribution channel with programs and support that will ensure distributors are equipped with the necessary knowledge and resources to meet these changing demands.”