With the economic recovery in Brazil, car sales have increased, which has greatly promoted the rapid development of the automotive paint market in Brazil. According to the latest research report issued by the US consulting firm Frost & Sullivan, the potential for development of the automotive paint market in Brazil will be greater in the future and it is expected that the market size will reach 840 million U.S. dollars by 2017. However, this market also faces the disadvantages of lack of relevant laws and regulations, inadequate supply of raw materials, and high logistics costs. Therefore, paint manufacturers must also strive for long-term development in many aspects.
The Brazilian paint market value in 2010 was 510 million U.S. dollars, accounting for 14.8%. In 2010, the automotive paint market used by Brazilian car manufacturers reached a value of 230 million U.S. dollars, accounting for 45.3% of the automotive paint market. It is estimated that the market value will reach 380 million U.S. dollars by 2017. The automotive paint market in Brazil is highly concentrated, with only three major competitors, DuPont accounting for 46%, PPG accounting for 28%, and BASF accounting for 26%. The market value of refinish used in Brazilian auto repair shops is 280 million U.S. dollars, accounting for 54.7% of the automotive coatings market. It is estimated that the market value will be up to 460 million U.S. dollars by 2017. There are 20 to 30 major competitors in this market, of which Dupont accounted for 26.8%, PPG accounted for 17.9%, BASF accounted for 16.1%, Akzo Noble accounted for 12.5%, Xuanwei accounted for 12.5%.
In recent years, as the 2014 World Cup and the 2016 Olympic Games will be held in Brazil, at the same time, the Brazilian government has issued many investment plans that have promoted growth in various fields in Brazil. In addition, the long-term low unemployment rate and credit expansion have boosted car sales. These factors have greatly stimulated the demand for automotive coatings in Brazil.
However, the development of the Brazilian paint market also faces some unfavorable factors. First, the market has large capacity, low concentration, and lack of relevant laws and regulations. The automotive refinish market in Brazil is huge, but it is currently too fragmented, which is not conducive to the communication between manufacturers and end-users and repair companies. This is exactly what customers value. Due to the fragmentation of the market and the absence of relevant laws and regulations, the development of the automotive paint industry in Brazil is very unregulated, and a large number of small and informal manufacturers are influxing. Substandard products have disrupted the market order. Second, the emergence of new repair technologies has exacerbated market competition. At present, in Brazil, the repair technology of alternative refinish lacquers has a low cost because it does not require the use of paint, which has greatly affected the development of the paint market. Third, there is insufficient supply of raw materials. At present, some raw material suppliers' distribution production bases are located outside Brazil, and the raw materials produced in Brazil cannot meet the needs of the entire market. Fourth, logistics costs are high. In Brazil, there are more than 500 kinds of raw materials for the automotive coatings market, the paint produced is sold to more than 2,000 repair factories and 20 automakers. However, the infrastructure of Brazil is backward and the ports and roads are mostly made of soybean curd. Therefore, the logistics cost is far higher than the potential cost.
In response to the many problems facing the current market development, Frost & Sullivan suggested that in order to respond to the increasing bargaining power and demand of Brazilian automobile manufacturers in the short and medium term, it should expand its share in the extremely dispersed refinish paint market. Auto paint manufacturers need to reduce costs, overcome quality bottlenecks, and provide more competitive products.
For long-term development, Frost & Sullivan proposes to enhance competitiveness from the following four aspects. The first is to find alternatives to raw materials. At present, the demand for raw materials continues to rise, and supply shortages will become bottlenecks in the industry. Therefore, whether or not new alternatives can be found is crucial for companies. The second is to integrate the industry chain. The integration of raw material production equipment into the production chain of automotive manufacturing can greatly reduce production time and save raw materials. The third is to promote environmental protection products. At present, most of the products on the market are solvent-based, and environmentally-friendly coatings such as water-based latex paint will be the main force for future market demand. Efficient ethanol is a good choice. The fourth is to expand the distribution network. Manufacturers wanting to expand their share in the large and dispersed Brazilian refinish market require a strong and effective distribution network.
Shenyang Zhongda Huanxin Refrigeration Technology Co., Ltd.
