The automotive paints segment expects that by the end of 2009 the economy will resume its course, because for now this market has remained stable and without conditions to grow.
by Duván Chaverra A.
The upheaval that the automotive sector has been suffering since the last quarter of the previous year is no secret. Large and well-known American car manufacturing companies, as well as suppliers of some mechanical parts have had to do everything possible to try to find the lifeline that will allow them to reach the shore, and not drown in a crisis that floods the world economy.
Governments in Latin America and other regions such as North America, Europe and Asia have tried by all means to find a loophole, even sometimes hasty, to prevent companies in this sector from going directly bankrupt.
Therefore, they develop strategic plans to encourage the purchase of vehicles through low interest loans or through incentives to invite customers to access them.
NULLHowever, this has only been able to stop in part the bad moment that this sector is experiencing, since in any case the statistics reveal that the numbers continue to fall and therefore the situation does not cease to worry, not only to this industry, but also to those sectors that depend on this.
This introduction is valid to talk about the topic that really concerns you as a reader of Inpra Latina, because in these lines we will analyze the real behavior of the automotive paint market, based on some sources of recognized companies in the sector in Latin America.
The trend in the market continues to decline but perhaps with a slight rebound, or at least so indicated by the source interviewed in Argentina, since the reduction in the purchase of vehicles has been significantly affecting the sector.
Similar seems to be the case in Chile, which does not have new car assembly plants, so the repainting industry is the one that directly concerns it. There, everything indicates that the figures in this first part of the year, although not ideal, give a part of optimism, especially for a high rebound in the entry of new cars during the initial three periods of 2008.
The situation is identical in Ecuador, where around 112,000 new vehicles entered during the previous year, a fact that makes the refinish sector striking, in one way or another. However, other events have prevented it from continuing with its growth rate.
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The current moment
To deepen the above, and starting with the country of the south of the American continent, we consulted the multinational company Basf, which has one of its headquarters in the capital Buenos Aires. There we spoke with Ángel Verdaguer, account manager for automotive terminals; and Marcelo Eguali, manager of the refinishing department.
Verdaguer commented that the beginning of 2009 was not encouraging and that the company he represents is prepared in the automotive paint market to continue watching the balance continue to fall.
"If we compare it with the previous year, we have a 23% drop in production in terms of the number of vehicles painted in Argentina. Basf has a market share of 70%, and for us this is going to be a tough year because we had the fixed costs prepared for a 2009, which supposedly, in the middle of last year, was going to have very high the volume of painting, but it fell terribly, "said Verdaguer.
According to Eguali, in the repainting sector the situation was similar at the beginning of the year: "We estimate a fall of approximately 16%, which was accentuated in the last month with a higher percentage."
In Ecuador, measures such as the restriction of imports have an impact on the industry, as does the economic situation, although the refinish market remains attractive due to the notable entry of new cars the previous year.
"In 2008, there was a record in sales in what is the entry of new vehicles. They sold 112 thousand units throughout the year, between imported and domestic cars. For the sector it is important to see that figure, but this year there may not be a great perspective due to the general economic issue and the restriction of imports that exists here, "said Luis Fernando Martínez, marketing manager of Pinturas Cóndor.
For his part, Cristian Ramos, commercial manager of the automotive division of Sherwin Williams Chile, said that the trend in the refinish market is maintenance. "The market has remained similar to what it was last year, at least these first four months of 2009. This, due to the fact that in the second half of 2008 all new vehicle sales records were broken, with which the automotive paint segment was quite complete."
Grow water-based paints
Water-based paint continues its slow but sure expansion into the market. The companies consulted by Inpra Latina agreed that it is the system they want to position definitively within the market.
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It should be noted on this subject, that according to some research by scientists, the change from a solvent-based system to water-based, represents a decrease in volatile emissions to the environment of more than 4 thousand tons and, in addition, the conversion of equipment and procedures for its application does not mean high costs.
"At the beginning of last year, Sherwin Williams became concerned in South America about incorporating paint into the water. Today we have the AWX line, which is water painting and obviously improves all working conditions, both for painters and for the workshops where the process is executed, "said the representative of the brand in Chile.
In Basf, on the other hand, they continue to wait with the government, so that there is a regulation
that promotes the general use of water-based paints. "This year we are focused on presenting the water-based technology for body paints, what happens is that there is a matter of legislation and until that forces them, it is difficult for the automotive terminals to make the investment that this change deserves. This year we have water base and high solids of more than 40%, this technology could be used," verdaguer said.
Strategies to succeed
The recession also forces companies to look for strategies to retain their customers, therefore, they are aimed at offering a product with greater added value, without the need to invest large sums of money to attract more consumers.
"Our pillar is to help the customer be successful. We do this through a very strong technical service, we are the only company that has a plant in Argentina, while our competitors bring products from Brazil. We have a structure of laboratories and assistants who are solving problems here and in the client's home," said Ángel Verdaguer.
In Chile, Ramos agrees in part with the previous quote, since his company develops a similar system: "Our strategy is based on the training we give to our painter clients; we teach them how to use our products with the corresponding paint schemes. This is intended to obtain greater productivity and for them to see what is the real economy that is being generated with the use of our products."
Optimism for what remains
Our sources hope that the crisis will come to an end and the economy will begin to be reborn perhaps in the last period. Basf Argentina expects this to happen for both the painting and refinish segments.
On repainting, Marcelo Eguali said that "there are some actions of the government promoting the purchase of zero kilometer vehicles, we hope that this plan will succeed."
Finally, Ramos, from Sherwin Williams, commented: "Despite all these phenomena that have hit us hard, our sales evolution has remained with an optimistic growth compared to the previous year, due to which we are generating higher sales in the market and therefore, our share is increasing in the country."
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