Rebounding (...or Reeling?) from the Recession
Cynthia Niekamp of PPG Industries offers the latest on the automotive coatings market.
What are the latest trends when it comes to market dynamics shaping the automotive coatings industry in the U.S.?
The U.S. automotive coatings market is being impacted by a number of factors, both short-term and long-term. Short-term, auto OEM production is increasing from a very depressed level in 2009, which is a positive sign. Medium- and long-term trends include environmental regulations and continued cost pressures, which both drive the need for new innovations.
Fuel economy regulations are getting tougher for the OEMs to meet. The CAFÉ standard has been raised for model year 2016 to an average of 35.5 MPG, a 30% increase from 2011. These new rules are driving the OEMs to look for weight savings, powertrain efficiencies and efficiency gains throughout the vehicle and the production process.
Cost pressure is also a constant factor in the automotive coatings market. We are intimately involved in the painting process of vehicles. PPG personnel work full time at our customers¡¯ paint shops to help ensure a high quality process in a demanding environment that meets or exceeds consumers¡¯ expectations. PPG supplies products and processes that reduce the overall cost of coating the vehicle. Our goal is to help the OEM produce a high quality vehicle at minimum cost.
As I mentioned, 2009 was an extremely challenging year for the North American automotive coatings industry. Vehicle production fell to 8.5MM units in 2009 down -32% from 2008 levels. This has forced coatings suppliers to rationalize their manufacturing and technical footprint, and general overheads. Suppliers and OEM¡¯s had to look at all processes for optimization, everything from R&D of new products to raw materials, manufacturing and delivery. The good news is that we are seeing good volume trends for 2010. The latest forecasts for U.S. vehicle builds are calling for production volumes to increase +35% in 2010 vs. 2009 to 11.6MM vehicles.