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Why automotive coatings market is actually a niche?

Recently I have seen a few respected market surveys dedicated to the global automotive refinishing market outlook for the coming decade. The key figure in those market researches was a forecasted turnover of … hold your breath, of more than 10 billion USD, from slightly above 6 billion now. While I was desperately trying to calculate what would be the market share (with minimum decimal after zero possible) I would be delighted to achieve with Etalon brand, I suddenly was stricken how small actually our core business market is a niche! Let me bring up to you some numbers. For example, global coatings market is 110 billion USD with predictions for 145 billion USD in 2020, global soft drinks market creates 867 billion USD in sales, while coffee consumption generates 32 billion USD every year in the US market alone. Do you feel the difference?

If you conduct a little search online concerning the niche markets characteristics, you will find a few widely accepted characteristics of a niche. Amongst others like, business-to-business nature of the business, high level of entrance costs, and the need in highly skilled human resources, you will probably stumble upon a parameter of major importance – profitability. A niche market can not boast of revenues of the mass markets, and, for this reason, sustainability within the niche can be only achieved by the high and stable profitability and margins.

Are you profitable enough?

If you visited the last Automechanika fair in Frankfurt last September, you probably had noticed that there were a few “new” brands. Fresh blood is good, however many of our esteemed colleagues actually lacked a clear argumentation why somebody should trust them, putting the lower price aside. I can bet the most of the conversations were around the question “How much do you pay for this or that product?” “We can give you cheaper price.” I know for fact that there are some players in the refinish supplies market who settle upon 10% gross profit simply to grab some share of sales. The fact is that margins in automotive refinishing industry took Acapulco height dive. However, what about fixed costs, management and marketing expenses, new products development costs? Can you cover all the expenses and still have money left for the further development and growth?

Conclusion

It is not a secret that the level of the cost in the collision repair industry has been driven down by the constant pressure from the insurance companies. Insurers know well about finances, margins and costs management. They are organized, with bargaining power and influence. Up to the present time, they have done a “great” job in decreasing the average repair bill down, and, unfortunately, this tendency affects all the chain with service providers and their suppliers suffering the most. Although big four or five global paint manufacturers have managed to keep their profits on a good level, for the smaller players staying profitable is a challenge. The only solution, in my judgment, is in innovation and after-sales service. Re-sellers and smaller manufacturers need to find the way to be relevant and useful to their customers. Simply delivering the goods is not enough any longer for survival. The combination of product and expert consultancy services is the only viable way to increase the profitability. Do not sell the product, sell the support behind it and charge the premium. And, even if it sounds a bit strange, find your niche in the niche.

What is your opinion?

Automotive clearcoats survery. Thought provoking findings.

Without a doubt, clearcoat is the King of automotive refinishing materials. Well, paint is equally important, but it comes second. Let’s call it … the Queen. Paint is designed to match, but clearcoat … to shine. A safe guess would be that there are much more brands and varieties of clears in the market, then basecoat systems. Clearcoat, for every big or small refinish materials supplier, is the matter of pride, the reason for war (price war I mean) and the vehicle for sales growth. In fact, some fellow rivals in the industry virtually oblige their customers to buy the correspondent quantities of clears related to the paint consumed. Free market, you tell me…

As with other important components of autobody repair puzzle, there are many misconceptions about the clears. For example, “only high solid clears are good” or “low VOC” clearcoats outperform by all parameters their solvent packed cousins. Furthermore, every paint supplier claims that he or she knows what exactly a painter asks from his clearcoat, and, usually, low price is on the top of the list (it is not, check the below survey findings). Lack of transparency (we talk about clearcoat anyway) in our industry, plenty of questionable marketing and absence of standards (read the article on this issue here) confuse the main person in the trade – painter – completely. Therefore, I decided to launch a short 10 questions survey to clear up things about clearcoats.

In the below chart you can see the results of the above-mentioned survey. It consisted of 9 clearcoat characteristics, which the participants were asked to grade from 0 (unimportant) to 10 (extremely important). The last, 10th question was asking about brand/product, which our participants considered as benchmark in quality. The whole list is presented below as well.

Survey findings

Based on the collected answers and from the additional comments we received from the participants the following conclusions can be drawn.

  • The level of shine and gloss retention are the most valued properties of any clearcoat with almost 100% of the respondents gave it a sold 10.
  • Transparency of the clearcoat comes second. From the information we got, there are still a few clearcoats in the market, which are not completely transparent. Usually slight yellowish color is the biggest problem.
  • Ease of application, flow, productivity and consumption – all these parameters – are highly valued as well. Painters like “forgiving” clearcoats, which will not run or solvent pop in case of thicker than normal application. Similarly, clears with high productivity and relatively low consumption are popular too for obvious reasons.
  • Final hardness, chemical and UV resistance are very important to about 85% of the respondents.
  • Drying and flash off times and ease of anticipated buffing (removing dust nibs etc) is crucial for 80% of survey participants.
  • Surprisingly price and solids content (VOC compliance) clearly came the last.

Between the lines

While we had an opportunity to discuss with the survey participants, a few thought-provoking points, which are not depicted by the chart, came to the surface.

  • Price of a particular product is more important to re-sellers than to painters. Paint sprayers care less about price, and more about the result and ease of application.
  • Gloss retention is the biggest challenge for the manufacturers, because a lot of clearcoats in the market loose the shine after only a few days.
  • VOC compliance is the last clearcoat characteristic, a car sprayer considers before the purchase.
  • Among the products, considered as benchmark there are many so-called “non-premium” brands.

The list of cleacoat mentioned as benchmarks  presented below:

Mipa CC8

Spieshecker HS 8055

Novol Spectral Klar 565 VHS

4CR HS Rapid 7235 and 4CR 7262 UHS

Sikkens Superior LV

Debeer Supreme HS 420

Glasurit 255

Roberlo Premium 250HS

HB Body 496

Silco Airmaxx 9600

Etalon 970 UHS

Carsystem Speed Plus VOC clear

Troton Master HS

PPG Deltron D880

RM Crystal Top HS

 

Water-borne paints are environmentally friendly, aren’t they?

 

A lot of things have been written about the transition from solvent to water-borne paints technology. Professionals in car refinishing sector were divided into two camps: those who liked the new technology and those who didn’t. Technically speaking, it has both positive and negative sides for a bodyshop. For me personally, more negative, yet I want to get back to the environmental impact.
So, what is the whole idea behind introducing the water-borne paints in the first place? Why did our bright minds in the EU and California decide to save the planet starting from the car bodyshops? Easy answer, one could say. Less VOC (volatile organic compounds) will cause less damage to the environment. So far so good, however, did anyone calculate the impact of this change on the environment from the angle of upgrading the spraying equipment?
It is a well-known fact that water-borne coatings require different conditions for curing; mainly we are talking about the air flow in a spray booth. In simple words, if your spray booth was good enough for spraying solvent based paints, it is doubtful that it will work for water-borne paints as well. Putting the extra costs of changing or adjusting your spray booth aside, let’s focus on the other changes required.

ecological paint
For example, if a bodyshop operates a spray booth with nominal air capacity of 18.000 m3/hour, it is certain that the owner will face a big problem with the drying times of the water-borne materials and the overall quality of the job. Thus, a spray booth with larger air circulation output is compulsory. In fact, minimum 24.000 m3/hour air capacity is required for a small standard spray booth, which, in turn, requires much bigger make-up unit. In general, we will need to move from 4Kw output power to 5.5 or even 7.5Kw (Hp 10). Inevitably, stronger and more powerful motors will require more energy. Even if you don’t change a spray booth, a couple of air dryers, which need additional 700l/min air consumption, will be required. To supply only to those dryers, a much bigger compressors is a must and high electricity consumption comes as a ‘bonus’. Again, this increase in electricity bill will not only damage the owner’s pocket.
The more energy required, the more damage will be done to our planet (up to the day that this article had been written, eternal engine has yet to be discovered). Here we come again to the environmental issue. Does it really make sense to cut VOC emissions, by increasing drastically energy consumption and increasing the output of carbon dioxide to the atmosphere? I don’t know the answer, do you?

ecological spray gun
Some figures from the Report on VOC emissions from the Vehicle Refinishing Sector conducted in 2000 by Entec UK and The Paint Research Association:
A switch to low VOC coatings and HVLP spraying technology:
– Increases thermal energy consumption by 18%
– Increases electrical energy consumption by 13%
– Decreases VOC emissions by 28%
Therefore it seems that the ecological impact of such changes has not been considered to the full extend.

Why independent refinishing products producers and suppliers must give their best shot in 2014?

By Alexandros Aslamazis

Cloud for blog post about small suppliers

 

This is my last blog post for 2013. It was a difficult year, yet with some great opportunities for developing new geographical markets. It is obvious that economic slowdown will continue in 2014. European Union, the world’s largest economy, is facing a second wave of crisis, and definitely not only in PIGS countries (Portugal, Italy, Greece, Spain). France is on the edge of recession, UK must cut budget expenses, and even Germany, will have problems, since someone must be importing their cars and machinery to feed the growth with exports, and the European market is Germany’s biggest customer.

 However, what I would like to pinpoint in this post is the absolute need for smaller players in the automotive collision repair market to find new competitive advantages over the big industry sharks. Business is slowing down, and big automotive coatings producers one after another put more weight on their B-brands or so-called economic product lines.

I have to say that in many cases those product lines are incomplete or even of lower then average quality. If Etalon, or any other refinishing supplies producer or supplier would adopt the quality standards like some of “premium economic” product lines, most probably the customers would be very strict with us. No doubt about that.

Don’t misunderstand me. Leaders in automotive coatings industry know about quality, but…they have to keep their margins on all market segments. Shareholders, stakeholders, dividends, huge fixed costs; all these do not allow them to drop their profit margins. Therefore in order to keep the profits levels up, they must compromise on quality, marketing or the range.  

In 2014 we will experience further growth of economic product lines in car refinishing sector. In many countries, importers use the holes in the legislation and turn back to cheaper and less energy hungry solvent-based paints. Thus, the competition in this market segment will be fierce. This is why smaller companies, which do not have a status and brand-awareness of their bigger piers, must invest on affordable quality of their products. High quality alone or cheap price alone will not do. Only the combinations of two, the golden mean, will provide long-term sustainable business.

  Happy New Year

 

What do a sniper and a car painter have in common?

                                                     
Target

I have to
admit, I like comparing things which are not meant to be compared just for fun.
So, after the blog post “4 things a car painter and a doctor have in common?”,
have a look on what the most skilled killer has in common with a peaceful (well
I suppose in most cases) bodyshop guy. I spent almost five years in the army,
so both professions are very close to me.

                                                                                                               
Refinishing pic

1.      1. 
Both
professionals need an essential tool for their job to be “executed”-  they need a gun! Not just any gun, but a top
gun
! Actually, the better the gun, the quicker the job will be done; less paint
will be sprayed, fewer bullets will be shot.

                                                                    

                        
IMG_3594

2.      

2. Whether
it is a sniper’s rifle or HVLP spray gun, both tools need regular calibration. To
keep equipment ready for action is crucial. Intensive spraying will inevitably
cause fan’s pattern deterioration, while frequent shooting interferes with
rifle’s settings.

                                                                           
IMG_3612

3.      3. 
Ambient
environment parameters like humidity and temperature affect the gun’s
performance. A good sniper must know the current humidity, temperature and wind
speed, because those affect bullet’s trajectory. While a good car painter must
also set his spray gun, according to the weather conditions (it is called
“Intelligent atomisation”
). For example, with high humidity, the atmosphere
slows the drying time of paint, and higher flow air cup (HVLP ) is better to be
used. While, as the temperature increases, drying times of coatings speed up,
so smaller nozzles are preferred for decrease paint flow. 
             

     Intelligent atomisation

4.      4. 
If
you ask a NAVY SEAL, what is the most important thing before and after the
operation, he would probably reply: taking care of his gun is an absolute
priority. Similarly, car sprayer will spend enough time to keep his favorite
Devilbiss or SATA (or any other brand) gun clean and shiny.

                  

                                                                                                         
IMG_3633

5.      
5. It
is not a secret that the best collision repair job is the one, which is not
visible, as if no repair was done what so ever. Alike, a sniper will leave no
traces on his ambush. No traces, no shells, absolutely nothing.

                 
Sniper 3

Despite the
similarities, I have to admit that there is one big difference between a sniper
and a car painter: the first is trained to kill, while the second is trained to
save…even if he just saves your car’s look
🙂



                                                                                                      
Doctor doll

 

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