Auto Body Repainting Market and the Challenge of Anti-Collision Technology
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The safety improvements implemented by automobile manufacturers seem to be working to help drivers avoid collisions. For the last couple of decades, car accidents have been on the decline.
This has had an impact on another business, the repair and repainting of damaged automobiles, which is seeing increasingly less work. Labor and materials remain costly, and the customer base is shrinking. Growth in the auto repainting marketplace, therefore, requires innovation, efficiency, consolidation, and a hyper focus on quality.
Improving Efficiency and Quality
Here’s how companies are going about solving these challenges of increasing their bottom lines in a flat environment.
Auto body repainting is done locally. The roughly 150,000 independent body shops that operate in Europe are all looking to squeeze the most value out of every liter of paint and coating. To maximize profits, many are looking to increase productivity and lower costs while maintaining a high level of quality.
Paint and materials account for a $3 billion market, which is shared among 70 chemical manufacturers and 1,000 local and regional distributors. The lion’s share goes to a handful of multinational chemical companies, but many smaller chemical manufacturers and distributors’ shops are independent. The manufacturers and distributors are set up to supply the painters that perform the labor for customers.
A painter’s work has typically been done at a body shop inside a paint cabin where an undercoat, base coat, and clear coat are applied. These paint cabins are complex pieces of machinery equipped with ovens that can be heated up to set temperatures during the process of refinishing.
To get color matched exactly, painters often have turned to comparing paint chips, much like homeowners who are deciding on a color for their walls. Then they’d have to mix on their own pigments and apply.
Suffice to say that the tasks and actions that have underpinned the auto repainting process have been slow, which is bad for the customer. They have also consumed a lot of energy, which is bad for the shop owners and the environment.
So, to increase the number of cars coming up and spend less time per car, the manufacturers have been working hard on new technologies and system supports like digitization and process automation. These systems are triggered when an invoice is created and they help streamline ordering and delivery, the repair process, and even the post transactional level.
Color mixing has gone digital, too. Painters have ditched the paint chips in favor of pigment systems that can mix up to 90,000 different combinations from about 100 tints. Many times, these pigment systems are proprietary to paint manufacturers, other times they’re the recommended by auto manufacturers. Shops can choose their preferred system based on their needs.
Another innovation is lower energy consumption, especially on the clear coat level.
In the past, you needed to heat up the cabin oven to temperatures as high as 60 degrees Celsius. Now manufacturers have been able to develop products that almost air dry, that you can apply and dry at 30 degrees or 20 degrees. That also has a huge impact on the energy bill of the body shop. Many of the paint cabins are now designed to capture material that falls to the floor during the painting process for reuse, which helps the bottom line for these shops as well.
Manufacturers, distributors, and shops can also increase productivity through consolidation, which is happening at all these levels of the value chain. An challenged industry like auto painting and repair that is directly connected to the declining number of car accidents is not the most attractive market for young generations to enter. That leaves a dearth of labor at some places. The children of owners who have the distributor body shop may not want to continue.
That creates an opportunity for other body shops to become bigger, for multi shop operators to buy other body shops, for bigger distributors to buy small distributors, and even for paint companies and manufacturers to buy smaller manufacturers. This trend is likely to continue over the next 10 years.
Some innovations don’t exactly help profits. Environmental innovations can be costly but they appeal to customers and help companies stay on the right side of government oversight. For example, a base-coat innovation that has taken root in Western Europe allows the industry to move from solvent-based paints to water-based paints, which are more sustainable and healthier for the painter and people. In Western Europe about 90 percent of the market has adopted the technology and government regulations are in place.
Now the question is, how fast will environmental innovations spread in places like Eastern Europe, and Turkey, and Africa where there is no governmental regulation. Solvent-based paints work very well and are also very efficient, but demand for these water-based products might become too big to ignore. More shops will have to figure out how to profit from this innovation soon.
These are just a few examples of how the marketplace is changing with innovation and adaptation. Auto accidents may be on the decline, but they won’t go away. What this means is that opportunities remain in the auto body repainting industry.
Companies that want to grow and thrive in this flat market, where customers are disappearing over time, will probably want to double down on these innovations and continue to tighten up the efficiencies on the supply chain. Perhaps most importantly, they will have to increase productivity by making it easier and faster for painters to do their jobs.
About Adrien Schrobiltgen:
Adrien Schrobiltgen is an independent consultant with over 35 years’ experience in the European specialty chemical industry of which over 9 years in the coatings industry. Previously, he was Vice President, EMEA Refinish Systems at Axalta Coating Systems. Before this, he spent over 27 years at DuPont, where his last role was Business Director, Europe for their performance coatings business.
This article was adapted from the GLG Webcast “Automotive Refinish Coatings: Key Trends and Future Outlook.” If you would like access to events like this or would like to speak with experts Adrien Schrobiltgen or any of our approximately 1 million industry experts, please contact us.