Original Equipment Manufacturer (OEM) Coatings Market to Receive overwhelming hike in Revenues

Original Equipment Manufacturer (OEM) coatings are applied on substrates for decoration and protection purposes. These coatings prevent corrosion, and wear and tear of the substrate. Twenty first century OEM coatings are 100µm thick. They are designed to provide dust, moisture, and UV-resistance. The lifespan of the automobiles increase on application of OEM coats. Initially, automobile coats were metallic (lead, chromium and heavy metals), however, due to increased awareness about their toxic tendencies, the market shifted to application of water based paints.

The major drivers fueling growth of this market are improved life and performance of products on application of OEM coatings and the increased automobile production in both developed and emerging markets. The major challenges faced by this market include the instability in raw material prices, and environmental concern regarding VOC’s that have resulted in a declining solvent-based coating market in favor of water-based and powder coatings.

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The coatings applied are of two types, liquid and powder coatings. Powder coatings offer better durability and have the environmental advantage of not possessing any solvents or VOC’s. Water-based coatings market is ever increasing in favor of solvent based coatings. Radiation cured coatings employ UV light instead of heat, which eliminates waste streams commonly seen in solvent coatings.

The largest end user is the automobile industry, followed by furniture, and aerospace industries. In addition, metal is the most coated substrate due to automobile industry’s market share.

OEM Coatings Market Outlook

Asia Pacific is the largest market for OEM coatings. The market is driven by strong performance of automobile and furniture industries. The rise in personal transportation and transit of consumer goods and raw materials have boosted all segments of the automotive industry. According to China Association of Automobile Manufacturers (CAAM) and Society of Indian Automobile Manufacturers (SIAM), in 2016, sales of cars stood at 28.03 million and 3 million in China and India, respectively. Furniture industry growth is a result of a flourishing residential construction, which is the result of shift in the population, from rural to urban settlements.

North America and Europe also presented sturdy vehicle sales, with the U.S. being the second largest cars market, after China. Furthermore, the presence of luxury car makers in these regions, has resulted in a high value coatings market, despite the low volume of coatings used. The solvent-based coatings market is in decline with powder and water-based coatings as preferred alternatives.

Latin American markets have witnessed a slowdown in the automobile industry. Political turmoil in Brazil, Argentina, Colombia, and Venezuela has contributed to this slowdown. Uncertainty in Mexico regarding renegotiation of the North American Free Trade Agreement (NAFTA) has caused panic amongst manufacturers who have access to the lucrative U.S. market. Despite this, Mexico has overtaken Brazil in recent years and continues to be a major automobile manufacturing and consumer market.

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The GCC countries have witnessed burgeoning growth in the construction industry, thus augmenting growth of the furniture industry. The large scale construction projects are partly state-funded and are a result of a vision to make the countries less dependent on hydrocarbons revenue. The planned privatization of Saudi Aramco is projected to bring in billions of dollars, which the government plans to invest in other sectors including construction.

In June, 2017, PPG Industries Inc. opened its new paints and coatings manufacture plant in Lipetsk, Russia. The plant is projected to consolidate PPG’s market position in the Asian, Middle East, and European markets. Major players in the OEM coatings market are Axalta Coating Systems, BASF SE, PPG Industries Inc., Nippon Paint, Kansai Paint, Akzo Nobel, Sherwin Williams Company, Bayer AG, KCC Paint, and Arkema SA.

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