Environmental protection policies are driving the transformation and transformation of the automotive coatings industry to a more efficient and intelligent direction

1. Overview of the automotive coatings industry

Automotive coatings are a broad category, including automotive body coatings, automotive refinish coatings, automotive interior and exterior coatings, and more. Automobile body coating is the coating used for the unified coating of the automobile before leaving the factory, the automobile repair coating is the coating used for the surface repair and care of the automobile, and the automotive interior and exterior coating refers to the coating used in the exterior decoration and interior of the automobile.

The uses and ways of use of automotive coatings are as follows:

Environmental protection policies are driving the transformation and transformation of the automotive coatings industry to a more efficient and intelligent direction

With the increasingly stringent environmental protection regulations and technological progress, the application of environmentally friendly automotive coatings such as water-based coatings, high-solids coatings, and powder coatings is becoming more and more extensive.

According to the different dissolved mediums, automotive coatings can be mainly divided into two categories: oil-based coatings and water-based coatings:

In view of the strengthening of environmental regulations and consumer health concerns, more and more car manufacturers and repair shops are choosing to use water-based paints for car painting, especially in the process of new car manufacturing and vehicle maintenance.

The biggest feature of water-based coatings is that most of the organic solvents in the paint are replaced with water, so that the composition of water-based coatings becomes

Water, aqueous resins, aqueous dispersants, pigments and organic co-solvents.

The principle of oil-based and water-based paints

The development process of China's automotive coatings industry reflects the pace of industrialization and technological innovation in the mainland. Since the 50s of the 20th century, with the start of the domestic automobile manufacturing industry, automotive coating technology has undergone a transformation from basic nitro paint to high-performance synthetic resin coatings, which such as acrylic and polyurethane coatings have been widely used because of their excellent weather resistance, corrosion resistance and construction performance.

In the 90s, with the establishment of production bases in China by international automobile brands, the upgrading of the local auto parts supply chain was driven, including the technology introduction and cooperative production of the automotive coatings industry, which not only improved the overall quality of mainland automotive coatings, but also promoted the research and development and standardization process of related technologies.

In the 21st century, in the face of increasingly stringent environmental regulations and sustainable development requirements, Continental's automotive coatings industry has responded positively and achieved remarkable results in the field of environmentally friendly coatings. In particular, in the R&D and application of water-based coatings, we have achieved a breakthrough in green coating by reducing the emission of organic solvents (VOCs). According to the data of the China Coating Industry Association, by 2021, China's new passenger car coatings will almost be fully waterborne, reaching a high proportion of 95%, while in the field of trucks, the application of water-based coatings is also quite extensive, and the water-based rate of original car coatings will reach 70%.

This series of achievements marks that China not only occupies an important position in the output of automotive coatings, but also walks in the forefront of the world in terms of technology research and development and environmental protection standards, reflecting the continuous improvement of the technical level of the mainland coating industry and the great importance attached to environmental protection

2. Segmentation of the automotive coatings industry market development trend analysis and prospect forecast

(1) Analysis of the overview of the automotive refinish coating industry

Automotive refinish coatings are an important part of automotive coatings, which belong to the automotive aftermarket segment to restore damage caused by external factors such as extreme temperatures, stones, and accidents. According to the coating function, automotive refinish coatings can be divided into primer, putty, primer, pigment, varnish and other coatings. Compared with automobile body coatings, the color types of automotive repair coatings are more complex, and it is more difficult to repair and restore them to new condition, and the automobile maintenance regions are extremely scattered, and the product use scenarios are quite different. The specific features are as follows:

The major factor influencing the demand for automotive refinish coatings is the number of vehicles. Since 2020, with the recovery of the global automotive industry, the automotive coatings market has maintained a steady growth trend. The global automotive refinish coatings market size was $14.4 billion in 2022 and is expected to reach $21.8 billion in 2030, with an average annual compound growth rate of about 5.32%. In the global automotive refinish coatings market, solvent-based coatings occupy 3/4 of the market share and dominate, while water-based coatings account for only 1/4.

(2) Analysis of the development trend and prospect forecast of the automotive refinish coating industry

1) The increase in the number and use of automobiles under the global economic recovery has led to an increase in the demand for automotive refinish coatings

The scale of the automotive refinish coating industry is mainly affected by factors such as the number of automobiles, the utilization rate of automobiles, the rate of traffic accidents, and the rate of accident maintenance. With the recovery of the global economy, the increase in the number of cars and the utilization rate of automobiles has comprehensively driven the market demand for automotive refinish coatings to rise.

Globally, the global automotive refinish coatings market size reached $10 billion in 2022. The automotive refinish coatings market is expected to grow at a CAGR of 4.4% annually between 2023 and 2028. Domestically, the market size of automotive refinish coatings in China will be about US$2.63 billion in 2022 and is expected to grow to US$4.9 billion in 2030, with an average annual compound growth rate of about 8.1%.

Global and Domestic Automotive Refinish Coatings Market Size and Forecast 2022-2030 (USD Billion)

2) The permeability of water-based coatings will continue to grow, and oil-based and water-based coatings will coexist for a long time

The proportion of water-based coatings in mainland automotive refinish coatings is relatively low, and the consumption of water-based automotive refinish coatings in mainland China accounted for only 3% in 2017. The high price, high maintenance cost, and difficult spraying are the important reasons that limit the development of water-based repair coatings. At this stage, the price of water-based repair coatings is higher than that of oil-based repair coatings, and water-based repair coatings are based on water, which determines that the wettability of various substrates is weaker than that of oil-based coatings, and the stability of spraying environment temperature and humidity and the standardization of process operation are higher, so additional equipment such as water-based spray guns and blow guns are required. After the auto insurance reform in 2020, some car owners choose to repair at their own expense after a small scratch of the vehicle, and relatively cheap oil-based repair coatings have become the mainstream choice. Although oil-based refinish coatings will continue to dominate for some time to come, with increasingly stringent environmental protection policies, the scale of water-based refinish coatings is expected to maintain growth, and the market penetration is expected to continue to increase.

3) International brands occupy a dominant position in the market, and the market share of domestic enterprises is expected to increase

Foreign brands dominate the domestic automotive refinish paint market, especially in the high-end water-based refinish paint market, with four foreign brands, including PPG in the United States, Axalta in the United States, AkzoNobel in the Netherlands and BASF in Germany, accounting for more than 50% of the market share. Before entering the domestic market, foreign brands have a relatively mature R&D and application foundation in Europe and the United States, and foreign brands have quickly occupied the domestic automotive refinish paint market with stable product quality, advanced colors, complete formula databases, perfect spraying training services and existing automotive OEM certification. In recent years, domestic enterprises have explored experience in market competition, set up technical teams and cooperated with scientific and technological institutions and universities, product research and development and production technology have made great progress, and increased market share in the low-end positioning market. In the future, the competitiveness of domestic coating enterprises will continue to improve, and it is expected to gradually penetrate into the mid-to-high-end market with the help of localization and cost-effective advantages to further increase market share.

4) Digitalization will become one of the important means of market competition

In addition to reducing the threshold of labor application, the digitalization of maintenance has emerged in the era of big data and has become an emerging countermeasure. Leading automotive refinish coating companies at home and abroad have developed digital systems, such as PPG's 3D visualization software and maintenance digital system, Yatu High-tech intelligent cloud system, and Donglai Technology's color cloud network color system.

3. Analysis and prospect prediction of the development trend of the subdivision of the automotive interior and exterior coatings industry

The development of the automotive interior and exterior coatings market in China is closely related to the production of automobiles in China. In 2023, the production and sales of automobiles in Continental will exceed 30 million units for the first time, reaching 30.161 million units and 30.094 million units, respectively, an increase of 11.6% and 12% year-on-year, respectively, and the annual production and sales volume will both hit a record high, achieving double-digit growth. Automotive interior and exterior coatings are mainly used for exterior parts such as bumpers, wheels, grilles and rear wings, and interior parts such as steering wheels, center consoles, door handles and buttons. It is estimated that the average amount of paint used for interior and exterior parts of each vehicle is about 4,355 grams, and combined with the production data of mainland automobiles, the amount of interior and exterior coatings used in mainland China in 2023 will be about 131,400 tons.

2019-2023 China's automotive interior and exterior coatings consumption

The main customers of automotive interior and exterior trim coatings are automobile OEMs or OEMs interior and exterior decoration suppliers, and foreign brands in the industry occupy an absolute advantage in the market. As the development of the mainland automobile industry has entered a stable period, the cost pressure of automobile OEMs has increased, and the demand for cost reduction has been transmitted layer by layer, and domestic enterprises are expected to gradually occupy the market by virtue of technological progress and cost advantages.

From 2022 to 2023, China's NEV penetration rate will increase from 25% to 36%, and China's NEV sales in 2023 will reach 9.495 million units, of which domestic sales will reach 8.292 million units, up 33.5% year-on-year, and exports will be 1.203 million units, up 47.7% year-on-year. In 2025, the sales of new energy vehicles in China and the world will reach 15.60 million units and 24.10 million units, with a compound growth rate of more than 30% from 2022 to 2025.

At present, leading new energy vehicle brands have brought new ideas to the automotive industry by reducing the difficulty of building cars through vertical integration. The design and coating of interior and exterior trims of new energy vehicles pay more attention to the multi-sensory experience of drivers and passengers, and automotive interior and exterior coatings, as products that can give color to the interior and exterior trims of passenger cars and enhance the touch, can directly meet consumers' needs for comfort and fashion. With the continuous upgrading of consumer demand, new energy vehicle companies are constantly deriving the demand for new functional coatings and new process supporting technologies for automotive interior and exterior coating manufacturers, and these changes will lead the automotive interior and exterior coatings industry to develop in the direction of high-end and functionalization.

4. Three characteristics of the automotive coatings industry

(1) Cyclical characteristics: The automotive coating industry often shows a certain periodicity, which is closely related to its downstream automotive industry. When the automobile industry is in an upward cycle, the development of new models and the increase in automobile production and sales will drive the growth of the automotive coatings market demand, on the contrary, the demand may decrease during the recession period of the automobile industry. In addition, the automotive coatings industry is also affected by factors such as macroeconomic cycles, policy regulation and control, and consumer purchasing power.

(2) Seasonal characteristics: the seasonality of the automotive coatings industry is not as obvious as that of automobile sales, but it is still reflected. Since the production and sales of automobiles are affected by the holiday effect, such as the Spring Festival period and the summer season, which is often the peak period for car purchases, automobile manufacturers will increase their productivity before these periods, which indirectly leads to fluctuations in the demand for automotive coatings in a specific quarter.

(3) Regional characteristics: China's automotive coatings industry presents strong regional characteristics. It is mainly manifested in the following aspects:

1) High industry concentration: the distribution of automotive coating enterprises is mainly concentrated in areas with a high level of economic development and a more developed automobile industry, such as the Yangtze River Delta, the Pearl River Delta and the Bohai Rim region, and the market share of these regions accounts for most of the country.

2) The gap between regions is widening: the eastern coastal region has attracted a large number of domestic and foreign automotive coating enterprises and automobile manufacturers with its advanced scientific research strength, perfect industrial chain and superior geographical location, which has further expanded the industrial development gap between regions.

3) Policy orientation: The government's industrial layout and support for different regions are different, which will also produce regional guidance and development differences in the automotive coating industry. For example, some places may be more inclined to support the production of environmentally friendly automotive coatings with low VOC emissions due to strict environmental policies.

In general, the cyclical, seasonal and regional characteristics of the automotive coatings industry jointly determine its market supply and demand situation and industry development trends. With the continuous tightening of environmental protection policies and the rise of the new energy vehicle market, the automotive coatings industry is undergoing a transformation to a more environmentally friendly, efficient and intelligent direction.

For more industry information, please refer to the "2024-2030 Automotive Coatings Industry Market Segment Analysis and Investment Prospect Forecast Report" of PwC Consulting, and PwC Consulting also provides market special research projects, industry research reports, industrial chain consulting, project feasibility study reports, specialized and special new small giant certification, market share reports, 15th Five-Year Plan, post-project evaluation reports, BP business plans, industrial maps, industrial planning, blue white papers, national manufacturing single champion enterprise certification, IPO fundraising feasibility study, IPO working paper consulting and other services. （PHPOLICY:MJ）

Environmental protection policies are driving the transformation and transformation of the automotive coatings industry to a more efficient and intelligent direction

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