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The development trend and future prospects of automotive coatings

In the rapid development of the automotive industry and the continuous upgrading of consumption, the body colors are becoming increasingly diverse, highlighting the trend of fashion personality. Behind this is the progress and innovation of paint technology. The core components such as the engine and transmission are related to the performance and handling experience of a car, while automotive coatings are directly related to the appearance, appearance, mechanical performance, durability, and environmental characteristics of a car. The value and development potential contained in them cannot be underestimated.

In addition, with the increasingly stringent national energy conservation and environmental protection policies, the trends of environmental protection, new energy, and lightweight are becoming more and more significant. Coatings, as an important part, are facing new changes and challenges.

So what is the current state of the automotive paint industry? What are the areas and challenges for improvement? What kind of competitive landscape will the industry present in the future? How should manufacturers respond and transform in the face of new trends

The Transformation of China's Automotive Coatings Industry

Over the past twenty years, China has become the world's largest producer of coatings. According to statistics, the production of industrial enterprises in the paint industry reached 18.9978 million tons in 2016, accounting for about 29.42% of the global total production, firmly holding the top position in the world. The rapid development of the automotive industry has effectively driven the upgrading of related paint industries and products, and has also changed the market pattern. The changes in the domestic automotive paint industry can be roughly summarized as follows:

Changes in development pattern:

The development of Chinese automotive coatings is in line with the development of China's automotive industry, and is a successful example of the reform and opening-up and globalization process. The paint industry has undergone decades of rapid development, gradually transitioning from extensive enterprise development to mature and orderly transformation. The manufacturing and research and development technology level of domestic enterprises has significantly improved, and many local coating enterprises with independent research and development capabilities have emerged. The competitive landscape dominated by foreign investment is undergoing changes, with a large number of collaborations, joint ventures, and mergers and acquisitions between international and domestic enterprises, which greatly promotes the exchange and upgrading of coating products and technologies.

The transition from quantity to quality:

Early companies focused more on price and sales, but with stricter environmental regulations, intensified industry competition, and diversified customer demands, the overall technological content of the paint industry continues to increase. Especially in terms of environmental protection, the market recognition of water-based paints with low VOC emissions and high solid content products is increasing. At the same time, high-performance coatings with higher technological content are constantly being launched to adapt to new trends such as automotive lightweighting and new energy functionalization.

Diversification of colors:

With the diversification of the automotive consumer group, car companies are becoming more bold and diverse in their use of body colors to enhance their competitiveness. Nowadays, our Asia Pacific R&D center develops over 10000 colors annually, continuously enriching the global color database with 4 million colors. Meanwhile, we have been releasing global automotive color trends reports for over 60 years to help car manufacturers understand color trends and guide consumer trends. Moreover, the country has allowed the modification of car body colors, leading to an increasing demand for after-sales service in this area. In the near future, we will launch color customization services in the field of paint repair. Consumers can choose their preferred colors on some platforms and then go to relevant stores for construction.

China has become a key focus for expanding the global paint industry:

The booming development of China's economy and automotive industry has led major international paint manufacturers to increase investment and establish local research and development centers.

Although the rapid development of the domestic automotive industry has greatly improved the situation in the paint industry, challenges have also emerged. In recent years, the rise in raw material prices has posed challenges to the entire paint industry. In order to alleviate cost pressures and maintain product quality, at the beginning of this year, ASD also announced price hikes for some products in the China region. In addition, macro factors such as the slowdown in China's economic growth and the increase in labor costs in the manufacturing industry have also had an impact on the paint industry

New Trends and Technologies

At present, new industry trends such as environmental protection, lightweight, new energy, and intelligence have triggered a new round of technological transformation in the automotive industry, posing new requirements and challenges to the entire supply chain, including coatings.

Firstly, in terms of environmental protection:

It is reported that a portion of volatile organic compounds (VOCs) in the atmosphere originate from the application process of solvent based coatings. In recent years, countries and regions have successively introduced policies to promote the control of volatile organic compound pollution, improve VOC limit standards for coatings and other products, and encourage the promotion of the use of water-based coatings and high solid content low VOC coatings. A water-based and high solid differentiation coating that combines excellent environmental performance and high performance will be the mainstream of future development. The introduction of national policies to promote water-based and high solid environmentally friendly coatings is a positive signal for us and also provides development opportunities. The "Integrated Coating Technology" includes ecological concept free intermediate coating process, "three coatings and one drying" water-based coating system, "two coatings and one drying" system, and other processes. By reducing the application of primer, coating, and flash drying temperature, it ensures the appearance of vehicles while reducing VOCs and greenhouse gas emissions during construction, effectively promoting the energy-saving process of automotive companies in equipment and coating processes, and is favored by mainstream automotive manufacturers. In addition to water-based coatings, high solid content coatings are also currently recommended environmentally friendly coating products in the industry. High solid content coatings and water-based coatings each have their own advantages. Water based coatings help with VOC emissions, while high solid content coatings help reduce carbon dioxide emissions. They are suitable for transforming traditional painting workshops into compliant painting workshops that meet environmental requirements.

Secondly, with the increasing pressure of national environmental protection policies, especially the implementation of the dual credit policy, the new energy of automobiles will be pushed to a new height. As one of the three key core components, the motor needs to become more efficient, weather resistant and seismic resistant, more environmentally friendly, and more reliable in performance, which puts higher requirements on the insulation materials used for variable frequency motors. In the case where there is still a market growth period for new energy, lightweight is an important way for car companies to achieve energy-saving and emission reduction policy goals. In recent years, we have seen the increasing application of carbon fiber and aluminum alloy in automobiles, and replacing steel with plastic is becoming a new trend in automotive materials. However, lightweight requires a high level of low-temperature baking technology for coatings, including reducing baking steps.

With the upgrading of future intelligent manufacturing, intelligent construction and color matching may emerge in the field of automotive coatings, thereby presenting more diverse and personalized body colors in the market and meeting the consumption needs of car owners.

The environmentally friendly, lightweight, new energy oriented, and personalized development trend of automobiles not only brings technical challenges to the paint industry, but also brings more development space and opportunities.

How to win in the future competitive landscape

When it comes to the current competitive landscape in the automotive paint industry, foreign investment still holds a significant market share, especially in the high-end market. But the development momentum of many local brands cannot be underestimated. The competition in this industry is fierce, and with the integration and elimination of the industry, there will be fewer and fewer competitors in the future. However, those who stay should be the strong, and there will be a competition between the strong. There are three key points for enterprises to win in competition: technological content, value-added services, and having excellent products in the competitive field. If we rely solely on price competition, survival will be more difficult. In addition, the learning and replication speed of the paint industry is fast, and competitive advantages may quickly disappear. We respect every opponent and constantly learn their strengths to enhance our competitiveness in technology, service, product quality, and create more market value for our customers.

In addition to intensified market competition, there is currently a development trend in the paint market where international brands are penetrating from the high-end to the mid-range market, and local brands are advancing from the low-end to the mid to high end. For car companies, the same applies. In recent years, independent car companies have developed rapidly, not only in terms of expanding sales, but also in terms of technology investment and strategy to enter the mid to high end market. Correspondingly, independent car companies will have an increasing demand for mid to high end coatings, especially water-based coatings and high solid content coatings.

In addition, the automotive aftermarket is also an important area of competition in the paint industry.

From chaos to standardization, from a single pursuit of sales to a focus on technological upgrades, with richer colors and increasingly diversified services, after years of transformation, the automotive paint industry is developing in a new posture. The booming development of the Chinese automotive industry and its resulting consumer and technological trends are triggering a new round of transformation and leap, which also brings more development space to suppliers in the automotive industry chain.