A slight recovery is underway, but we cannot speak of full throttle. The primary growth is in Asia, while Europe is stagnating. Nevertheless, market researchers at PRA are forecasting that the market for automotive OEM coatings will grow by 4.4？% annually until 2027, while the figure for automotive refinish coatings is 2.7？%.

（By Damir Gagro.）

How is the situation in the automotive sector Image source: L-Klauser/StockAdobe

Global car production is slowly recovering. Production figures have not yet reached the peak of over 97？million cars in 2017. During the start of the pandemic in 2020, the figures fell to around 77？million vehicles. Since then, however, the figures have been rising again.

According to the latest statistics from the International Automobile Manufacturers Association (OICA), just over 85？million vehicles were produced in 2022. Roald Johannsen from PPG Industries notes that the market has still not returned to pre-Covid pandemic levels, let alone the peak of 2017. This means that there are fewer cars that need to be protected and embellished with paint.

“In 2023, the automotive market recovered somewhat, particularly due to the improved availability of semiconductor chips. As a manufacturer of automotive coatings for series production and refinishing, we were able to meet the resulting increase in demand from our customers with higher volumes. We expect the global automotive market to stagnate at its current level in 2024, especially in Europe,” says Uta Holzenkamp from BASF’s Coatings division. Europe, like North America, remains an important market for the German coatings manufacturer. In the refinish coatings industry, there is currently a consolidation of workshops in many regions. Last year, the overall market had to contend with headwinds worldwide.

While the situation in North America is still tense, the market in Europe appears to be recovering, according to Rob Lagendijk from Akzo Nobel. He sees growth above the global average, especially in China and South East Asia. Holzenkamp also sees the primary growth in this region. However, the market does not only show potential and opportunities. After the pandemic, supply chains faced major challenges, but they are now recovering, Lagendijk is certain.

Volume growth expected for automotive coatings

The market research company PRA puts the global market size for automotive series coatings at 1.2 billion litres. Passenger cars account for 850？million litres and light commercial vehicles for 350？million？litres.

A look at the regional distribution reveals the clear dominance of the Asia-Pacific region. Over 56？% or 676 million litres of automotive series coatings were consumed there – in 2016 it was 10？% less. Growth rates are also highest in this region, as forecast by the PRA figures. The global compound annual growth rate (CAGR) is 4.4？% until 2027. The volume is then expected to rise to just under 1.5 billion litres.

The volume in the automotive refinish segment is lower. The market researchers determined a volume of 742？million？litres. The highest consumption in this segment is also located in the Asia-Pacific region – around 37？% of the total volume. This corresponds to a good 273？million？litres. By 2027, the volume is expected to increase to almost 330？million？litres – an average growth rate of 3.7？%. According to PRA forecasts, the total market for automotive refinish coatings will reach a volume of 880 million litres in 2027.

The average annual growth rates have increased in both segments, automotive OEM coatings and refinish coatings, when the two comparison periods 2017-2022 and 2022-2027 are compared. In 2017-2022, the growth rate for automotive OEM coatings was -3.7 % and for 2022-2027 it was 4.4 %. In the automotive refinish coatings segment, the differences are not as significant, but the growth rate of 2.7 % is also higher than the value at that time (2017-2022: 1.1%).

Focus on sustainable solutions

The most important topics are in the direction of coatings that promote sustainability, productivity and individualisation. “We are seeing a shift towards more sustainable and bio-based products, which we see as more of an opportunity than a challenge. In China, we see a shift towards water-based coating technologies due to new legislation,” emphasises Lagendijk. Holzenkamp emphasizes the importance of sustainable solutions, as both car manufacturers and repair shops are placing increasing emphasis on the sustainability of coatings. The aim of BASF Coatings is to make the best possible use of existing resources and reduce CO2 emissions. “This is why we have introduced products in both the series paint and automotive refinish sectors that are certified according to the biomass balance method and are based on the use of renewable raw materials at the start of the production process,” says Holzenkamp.

In addition to rising energy and personnel costs, the biggest challenges for Holzenkamp include, above all, official regulations regarding the use of individual raw materials. Depending on the region, different limit values must be taken into account and, if necessary, new raw materials must be qualified without the change affecting the quality of the products. At BASF Coatings, the research and development teams, product safety and the supply chain therefore work closely together in order to be able to react at an early stage. Johannsen also sees the challenges as opportunities: improving sustainability and productivity through innovation that is closely aligned with customer goals. Such developments include, for example, shortening the painting process, reducing energy consumption and increasing the proportion of bio-based materials.

In addition to the increasing demand for bio-based materials, Lagendijk says it is not just about colours and surfaces. “The products should also offer functionality, e.g. heat reflection, anti-reflection, self-cleaning or antimicrobial properties,” he says.

Johannsen emphasises the value of the coatings industry: “Our products must enable customers’ transition to electrification and autonomous driving by offering new or multifunctional properties.”

E-mobility opens up new opportunities

The growing trend towards e-mobility will also have an impact on manufacturers of automotive coatings. “The transition to electric vehicles offers new opportunities, as coatings are one of the most important functions in the battery-electric powertrain. There is therefore an opportunity to increase the proportion of coatings in each vehicle, which is a very positive development,” explains Johannsen. Coatings will play a leading role in the transition to electric vehicles and further develop the technology, he is certain.

Lagendijk points to the growing interest in radar-transparent coatings. These systems have been perfected in collaboration with car manufacturers. “Vehicle manufacturers no longer have to worry about hiding sensors behind solid metal, which can block signals from safety functions such as collision warnings.”

Holzenkamp also sees potential in electromobility. “Electromobility opens up completely new possibilities for the design of vehicles, which also has an impact on colours and effects that underline the brand image and specific design features of the models. Regardless of the powertrain, the functionality of paints is playing an increasingly important role,” says Holzenkamp. Modern paint systems offer greater transparency for radar waves in order to increase the accuracy and transmission of radar signals and achieve improved reflection for LiDAR sensors. Both aspects are crucial for driver assistance systems and will also play an important role for autonomous driving in the future. “It’s an exciting time for innovation in this area,” says Johannsen, summarising the current situation in the automotive coatings market.