Yogender Singh, India, Asia-Pacific Correspondent06.11.21
South East Asia – comprising some of the largest automotive producers in the region – has become one of the largest growth drivers of the automotive paint industry in the Asian region in the last decade. However, COVID-19 has had a major impact on the region’s automotive coating sector in the last year and a half. Coatings World reviews the impact of the pandemic on the region’s automotive coating industry in this feature.
Overview of Automotive Paint Industry in South East Asia
Comprising Indonesia, Malaysia, Philippines, Thailand and Vietnam, the South East Asian region has registered one of the largest growth rates for the automotive paint and coatings industry in the Asian region during the last few years.
The emergence of Thailand and Indonesia as key automotive production hubs in the last decade has had a profound impact on the automotive coating consumption in the region. Thailand and Indonesia account for nearly 70% production and about 78% consumption of automotive coatings in the region. Malaysia has also been registering steady growth rate in the consumption of automotive coatings during the last few years. However, the focus of major automotive coating producers have been the lucrative Thai and Indonesian markets.
OEM coatings accounted for 93% of the overall automotive coatings market in 2019.
In addition to automobiles, two wheelers are also a major consumer of automotive coatings in the region. In coatings for two wheelers, Indonesia leads the pack, followed by Vietnam, Thailand, Malaysia and the Philippines in that order.
Akzo Nobel (four plants in Thailand, three plants in Indonesia, two plants in Vietnam and one in Malaysia), Nippon Paint (two plants in Thailand, four in Indonesia, three in Malaysia and three plants in Vietnam) and Kansai (three plants in Thailand, two in Malaysia, two in Indonesia, and one in Vietnam) dominate the region’s automotive coating market. Domestic companies in each country are confined to automotive refinish market.
In an unrelated development in March 2021, Nippon Paint Malaysia acquired a majority stake in Vital Technical Sdn Bhd. Vital Technical, established in 2002, is a leading player in the Malaysian sealants, adhesives and fillers (SAF) market. It is headquartered in Malaysia with four production facilities and has expanded its business in all the South East Asian countries.
Impact of COVID-19
COVID-19 has had an unprecedented negative impact on automotive paint industry majors in the entire ASEAN region in the year 2020. Automotive coating consumption and production took a severe hit during the entire year. Though numbers started to improve during the last quarter of the year 2020, it is still too early to say whether this revival is temporary or permanent.
Apart from the human toll, the coronavirus pandemic has also affected the region’s economy and automotive production. During the first wave, Indonesia and Thailand were the worst affected countries. Both the countries were forced to implement lockdowns for an extended period of time in the first and second quarters of 2020.
Though exact figures about the decline in automotive coating production and consumption from the region are not yet out, an analysis of decline in automotive production figures in the region indicates that automotive coating consumption in the five major countries of the region declined in the range of 30-35% (on volume basis) in the year 2020.
The region’s largest automotive coating producer and consumer, Thailand suffered a drop of 29% in automotive production in 2020. The Thai economy has been gradually recovering from the pandemic shock of the first half of 2020 on the back of fiscal stimulus and a relaxing of domestic mobility restrictions, growing 0.2% quarter-on-quarter in the first quarter of the current year, following the 6.1% contraction in 2020. However, a fresh covid outbreak has again dampened the prospects of automotive paint industry in the recent months.
During the year, Indonesia, the region’s second largest automotive producer, suffered the most in the lot as its automotive production slumped by 46%.
Future Prospects for Automotive Coatings in the South East Asia Region
There is no doubt that South East Asia is one of the most attractive markets for automotive coating producers. Major coating producers based in the region are anticipating that a significant part of automotive production from China will shift to some of the countries in the region in the medium and long term, which will provide ample opportunities for the domestic and international automotive coating producers in the region.
Hitherto, most of the automotive coatings demand was concentrated in Thailand and Indonesia, but on account of recent investments in automotive sector in Malaysia and Vietnam, it is anticipated that these four countries will drive the automotive coatings sector to further highs in the coming years.
Overview of Automotive Paint Industry in South East Asia
Comprising Indonesia, Malaysia, Philippines, Thailand and Vietnam, the South East Asian region has registered one of the largest growth rates for the automotive paint and coatings industry in the Asian region during the last few years.
The emergence of Thailand and Indonesia as key automotive production hubs in the last decade has had a profound impact on the automotive coating consumption in the region. Thailand and Indonesia account for nearly 70% production and about 78% consumption of automotive coatings in the region. Malaysia has also been registering steady growth rate in the consumption of automotive coatings during the last few years. However, the focus of major automotive coating producers have been the lucrative Thai and Indonesian markets.
OEM coatings accounted for 93% of the overall automotive coatings market in 2019.
In addition to automobiles, two wheelers are also a major consumer of automotive coatings in the region. In coatings for two wheelers, Indonesia leads the pack, followed by Vietnam, Thailand, Malaysia and the Philippines in that order.
Akzo Nobel (four plants in Thailand, three plants in Indonesia, two plants in Vietnam and one in Malaysia), Nippon Paint (two plants in Thailand, four in Indonesia, three in Malaysia and three plants in Vietnam) and Kansai (three plants in Thailand, two in Malaysia, two in Indonesia, and one in Vietnam) dominate the region’s automotive coating market. Domestic companies in each country are confined to automotive refinish market.
In an unrelated development in March 2021, Nippon Paint Malaysia acquired a majority stake in Vital Technical Sdn Bhd. Vital Technical, established in 2002, is a leading player in the Malaysian sealants, adhesives and fillers (SAF) market. It is headquartered in Malaysia with four production facilities and has expanded its business in all the South East Asian countries.
Impact of COVID-19
COVID-19 has had an unprecedented negative impact on automotive paint industry majors in the entire ASEAN region in the year 2020. Automotive coating consumption and production took a severe hit during the entire year. Though numbers started to improve during the last quarter of the year 2020, it is still too early to say whether this revival is temporary or permanent.
Apart from the human toll, the coronavirus pandemic has also affected the region’s economy and automotive production. During the first wave, Indonesia and Thailand were the worst affected countries. Both the countries were forced to implement lockdowns for an extended period of time in the first and second quarters of 2020.
Though exact figures about the decline in automotive coating production and consumption from the region are not yet out, an analysis of decline in automotive production figures in the region indicates that automotive coating consumption in the five major countries of the region declined in the range of 30-35% (on volume basis) in the year 2020.
The region’s largest automotive coating producer and consumer, Thailand suffered a drop of 29% in automotive production in 2020. The Thai economy has been gradually recovering from the pandemic shock of the first half of 2020 on the back of fiscal stimulus and a relaxing of domestic mobility restrictions, growing 0.2% quarter-on-quarter in the first quarter of the current year, following the 6.1% contraction in 2020. However, a fresh covid outbreak has again dampened the prospects of automotive paint industry in the recent months.
During the year, Indonesia, the region’s second largest automotive producer, suffered the most in the lot as its automotive production slumped by 46%.
Future Prospects for Automotive Coatings in the South East Asia Region
There is no doubt that South East Asia is one of the most attractive markets for automotive coating producers. Major coating producers based in the region are anticipating that a significant part of automotive production from China will shift to some of the countries in the region in the medium and long term, which will provide ample opportunities for the domestic and international automotive coating producers in the region.
Hitherto, most of the automotive coatings demand was concentrated in Thailand and Indonesia, but on account of recent investments in automotive sector in Malaysia and Vietnam, it is anticipated that these four countries will drive the automotive coatings sector to further highs in the coming years.