Analysis of China's automotive coating industry in

2019 analysis of China's automotive coating industry

2019 analysis of China's automotive coating industry

January 16, 2020

0 Introduction the data released by the China Automobile Association shows that since May 2018, automobile production and sales have experienced negative growth for the first time. The annual total output was 27.8092 million vehicles, a year-on-year decrease of 4.16%; The total sales volume was 28.0806 million, a year-on-year decrease of 2.76%

according to the statistics of the Ministry of public security, as of December 2018, the car ownership reached 240million, an increase of 22.85 million over 2017, an increase of 10.51%. China has about 170 cars per thousand people, far lower than the 800 cars in the United States. The peak of automobile consumption in China has not yet arrived, and the market still has great development potential

1 current situation of China's automotive paint market

automotive paint, as one of the most technologically important components of the paint industry, mainly plays the role of long-term protection and appearance value of automobiles, which can be divided into three categories: original OEM paint, automotive touch up paint, and automotive interior and exterior decoration parts paint. From the perspective of the global market, the development trend tends to be stable, in which the market share of OEM original paint and automotive touch up paint is occupied by a few well-known enterprises. Table 1 shows the basic situation of the world's top ten automotive coating enterprises in 2018

Table 1 basic information of the world's top ten automotive coating enterprises in 2018

in the Chinese market, the turning point of automotive production and sales volume decreased and the double-digit growth of vehicle ownership continued, resulting in the same trend that the three segments of automotive coating market concentrated to the head, while showing the diversity of development

1.1 current situation of OEM market of automobile coatings

automobile OEM coatings are mainly used for painting on the assembly line of new cars, playing a protective, decorative or other special role. Therefore, the market is highly correlated with the sales of new cars

⑴ the market concentration continues to improve, and foreign brands occupy a dominant position.

in the field of automotive OEM coatings, the competitiveness of Chinese brands is very weak. Under the guiding principle of "market for technology" industry development, foreign shareholders of joint venture vehicle enterprises have always occupied a leading position in the technical standards of parts and components and supplier certification and access

in 2019, more than 95% of the Chinese market share of automotive OEM Original coatings was occupied by foreign brands such as PPG, Xiangjiang Kansai, Aishi, BASF, Nippon, KCC, etc. Shanghai jinlitai, Zhongshan Bridge and Hubei Swan are only a few Chinese brands in the industry, mainly concentrated in BAIC Foton, Jiangling Motor, Chang'an mini car, Dongfeng commercial vehicle, etc

globally, the concentration of automotive OEM original coating industry continues to increase, forming a "3+2+1" pattern, that is, three European and American brands, two Japanese brands and one Korean brand

⑵ due to the influence of automobile sales, the growth of automobile OEM coatings tends to weaken

for OEM Original coatings, the biggest factor affecting market demand is automobile production and sales. As China's automobile production and sales show a downward trend, the sales of automotive coatings have entered the neck period of blind investment and blindly seeking perfection in the bottle of lithium power batteries

Sohu data shows that in the first half of 2019, the sales of many coating enterprises showed slight negative growth. BASF fell by 1% year-on-year, of which OEM Original coatings fell significantly; AkzoNobel automotive coatings and special coatings decreased by 1% year on year; Ashtar fell by 4.72% year-on-year, with OEM original coating as the main decline factor. In order to maintain performance and share prices and hedge against the negative impact of the downturn in the automotive market, PPG, Astor, BASF and others rely on oligarchy to seek to pass on costs and increase profits through various forms of price increases

1.2 current market situation of automotive interior and exterior trim coatings

automotive interior and exterior trim coatings are used for new vehicle interior and exterior trim coating, as well as automotive aftermarket replacement parts coating. Among them, the market pattern of exterior decoration large-scale coatings is similar to that of OEM Original coatings, and the monopoly oligarchs of Europe, America, Japan and South Korea occupy most of the market. Small and medium-sized professional coating enterprises in Europe, America and Japan eat their respective professional territories due to the characteristics of miscellaneous colors, small batches and multiple batches of exterior and interior decoration coatings, as well as the long-term history of cooperation under national restrictions

the market concentration of automotive interior and exterior trim coatings also shows an accelerating upward trend, but the monopoly degree is eased compared with the original OEM coatings. Based on the comprehensive analysis of the information reported by the enterprise officials and the media, this paper lists the relevant information of China's automotive interior and exterior decoration coating industry in 2019 (Table 2), the relevant information of the coating suppliers of exterior decoration parts certified by the automobile OEMs (Table 3), and the relevant information of the coating suppliers of interior parts certified by the automobile OEMs (Table 4)

Table 2 information of China's automotive interior and exterior decoration coating industry in 2019

Table 3 information of exterior decoration parts coating suppliers certified by automobile OEMs

symbol description: ☑ Certified cooperation △ under certification

Table 4 information of interior parts coating suppliers certified by automobile OEMs

symbol description: ☑ Certified cooperation △ in the process of certification

it is not difficult to find the coating information of interior and exterior parts certified by the OEM. The development of China's automotive industry requires the rise of China's automotive parts industry. The weaknesses and challenges of foreign-funded parts enterprises in key value links such as R & D localization, supply localization and rapid response are important opportunities for the development of China's parts industry

as the global automotive industry enters the inflection point, the growth slows down, and the cruel competitive pressure of the market is transmitted layer by layer, and the cost control ability of the main engine plant becomes a battle of life and death. The market is full of opportunities and challenges for Chinese automotive coating and parts brand suppliers who can not only obtain the quality certification of automobile OEMs, but also have a comparative cost advantage

1.3 current market situation of automotive touch up paint

automotive touch up paint is mainly used for after-sales maintenance of passenger cars and painting of new passenger cars, and the car ownership is the main influencing factor. In addition, the economic expectation affects the actual mileage of car owners, the insurance premium policy affects the frequency of small body and paint maintenance, and the technical progress of traffic regulations affects the vehicle accident rate

various reforms in the past three years have led to a sudden sharp rise in the secondary influencing factors of China's automotive touch up paint market, and then the marginal impact has decreased gradually, offsetting the main factor of car ownership, and the industry's growth rate is slow. In 2019, the marginal of secondary factors continued to decline, and the growth rate of China's automotive touch up paint industry gradually stabilized. It is expected that it will return to the normal growth with car ownership as the main influencing factor from 2020

table 5 brand information of automotive touch up paint in China in 2019

note: ⑴ first tier high-end brands refer to those that have obtained the global quality certification of mainstream automotive brands and are mainly aimed at automotive 4S stores and medium and high-end automotive customers

(2) second tier middle-end brands refer to 4S stores without quality certification from automobile OEMs, quality self-protection, large and medium-sized repair shops and low-end brands. The existence of friction will affect the compression resistance of specimens and even destroy the situation

(3) third tier economic brands refer to small and medium-sized repair shops and roadside stores without quality certification from automobile OEMs, quality assurance and after-sales service

unlike the automotive OEM original coating industry, which is defined as a high-tech advanced manufacturing industry, the automotive touch up paint industry is essentially a modern service industry based on high-tech manufacturing, with the following characteristics: (1) customers are extremely dispersed. There are 29000 brand 4S stores and 500000 automobile repair plants in China. (2) Personalized on-site color allocation. 80-100 semi-finished Color Masterbatch systems, and 100000 patched colors without color difference and primary color recovery are deployed by high-level color technicians on site. (3) The best complex combination of various primers, paints, varnishes and water-based and oil-based products requires on-site professional technical training and guidance. Therefore, efficient training and service networks all over the country have become key factors in the industry

in addition to the industrial characteristics of high technology content, high original factory certification threshold, few quotas, difficult non-standard service management, brand effect guiding consumer choice, the market concentration of touch up paint is significantly accelerating. At present, the mainstream market of original certification of Chinese touch up paint presents a "5+3+2+1" pattern: five European and American brands, of which PPG and BASF continue to acquire and acquire, and the evolution trend is three brands; Three Japanese brands, Nippon, Kansai and Lok; 2 Korean brands, KCC and naroo; One Chinese brand, Donglai goufei "onwings", it is worth noting that Donglai "goufei" has obtained the certification of most automobile manufacturers in the world, showing a sudden rise

according to the comprehensive statistics of market sales, the number of OEM certification and brand reputation, the enterprises with the best performance in China's automotive touch up paint market in 2019 were PPG, Donglai paint, Aishi, AkzoNobel and BASF

table 6 information of original certified touch up paint suppliers in the Chinese market in 2019

symbol description: ☑ Centralized procurement of original factory certification ⊙ original factory certification training service

the quality certificate of the global automotive touch up paint industry, and the official quality certification of automobile OEMs is the only authoritative evaluation in the industry. Table 6 shows that Donglai goofy is the only Asian or Chinese brand among them

2 evolution trend of China's automotive coating industry

2.1 integration and mergers and Acquisitions: the oligopoly has intensified, and the industry concentration has accelerated.

since the reform and opening up, the automotive coating industry has opened its arms to welcome the free entry and full competition of global coating enterprises. OEM original coating enterprises in Xiangjiang Kansai exist in the form of joint ventures, and other Chinese enterprises are almost wiped out; A small number of Chinese enterprises in the field of interior and exterior decoration coatings have a fair momentum of development and retain the hope of balanced competition; The field of automotive touch up paint is relatively good. Donglai "goofy", a private technology enterprise, has obtained the original factory certification of most automotive brands and has the ability to compete with European, American, Japanese and Korean enterprises

since 2019, the price, production capacity and operating conditions of the upstream raw materials of the coating industry have been fluctuating continuously, the human and land operating costs have risen rigidly, the environmental protection and safety supervision policy standards have been continuously improved and strictly enforced, and the macroeconomic growth rate has continued to decline, leading to the increasing competition in the industry. A large number of small and medium-sized coating enterprises without brand premium, technology accumulation and safety and environmental protection protection have to take the initiative to close down and exit, or wait hard, or look for opportunities to change hands

reorganization and merger of the global automotive coating industry I 3: regular inspection of the transmission condition of the sprocket continues: Sherwin Williams announced the acquisition of Valspar, PPG intention curve acquisition of aiside. Many mergers and acquisitions have also occurred in the Chinese market, including PPG's acquisition of Guangzhou Bonnie and Foton lion, AkzoNobel's acquisition of Changzhou Fulham, Xuanwei's acquisition of Jiangsu plana, BASF's acquisition of Guangdong Yinfan chemical, Nippon's acquisition of Fujian Xinwang, etc

the concentration of the automotive coating industry continues to accelerate, and the leading enterprises with brands, technologies, channels, scales and the original certification of the automobile main engine factory will occupy more markets. The stronger the stronger, the obvious Matthew effect

2.2 in depth environmental protection: the popularization of water-based paint is accelerated, and the new national standards lead the world.

the driving force of water-based paint mainly comes from external pressure of policies and the brand building needs of automobile enterprises. Compared with traditional solvent based automotive coatings, waterborne automotive coatings are environmentally friendly and resource-saving, which is the development direction of automotive coatings in the future

the European Union issued the coating product directive 2004/42/ec, which stipulates that the VOC content limit of automotive touch up primer is 420g/L. California, Hong Kong and Japan followed up with the legislation. On July 3, 2018, the State Council of China issued the three-year action plan for winning the blue sky defense war

the original OEM coating water-based paint has the fastest progress. Water based electrophoresis has been put into full use, and the technology of water-based intermediate coating and water-based color paint has basically become mature. Only varnish cannot be hydrated on a large scale because