India’s bumpy road to automotive sector recovery

Our India correspondent, Yogender Singh, updates APCJ readers with statistics and views on the progress of the Indian automotive sector

Barring the last two years, the Indian automotive paint industry has exhibited steady growth during the last few years. During 2015-9, the Indian automotive paint industry registered a CAGR of 8.1%, while the last two years have been one of the leanest periods for automotive paint and coating producers on account of the COVID-19 -induced restrictions and economic slowdown.

Overview of the Indian automotive paint industry

The emergence of India as one of the largest automotive production hubs in Asia has given a substantial push to the automotive paint industry in the country in the last decade. Leading multinational and domestic paint producers cater to the automotive paint and coatings demand in the country. Kansai Nerolac, Asian Paints and Berger Nippon Automotive Paints are three of the leading paint and coatings producers for the automotive segment in the country. Growth in value has outstripped the volume growth in the Indian automotive coating industry by a significant percentage during the last decade. Consumption of higher value added or premium products is on the rise on account of the popularity of luxury cars and SUVs in the country.

State of the Indian automotive industry

India produced a total 22,933,230 vehicles including passenger vehicles, commercial vehicles, three-wheelers, two-wheelers, and quadricycles during 2021-22 financial year (April 2021 to March 2022), as against 22,655,609 units in April 2020 to March 2021. Total passenger vehicle sales increased from 2,711,457 to 3,069,499 units. Sales of passenger cars decreased from 1,541,866 to 1,467,056 units, while sales of utility vehicles increased from 1,060,750 to 1,489,178 units in April 2021 to March 2022 compared to the previous year. During the same period 113,265 vans were sold compared to 108,841 units in April 2020 to March 2021.

The overall commercial vehicles sales increased from 568,559 to 716,566 units. Sales of medium and heavy commercial vehicles increased from 160,688 to 240,577 units and light commercial vehicles increased from 407,871 to 475,989 units in April 2021 to March 2022 compared to the previous year. Sales of three-wheelers increased from 219,446 to 260,995 units in April 2021 to March 2022 compared to the previous year. Two-wheeler sales decreased from 15,120,783 to 13,466,412 units in April 2021 to March 2022 over the same period last year.

Major automotive paint and coatings producers

Though most of the major Indian paintmakers have diversified in the lucrative automotive segment, three major producers stand out in the competition. These three automotive paint and coatings producers collectively account for more than 60% of the total coating output for this sub-segment.

Kansai Nerolac

Speaking on the occasion of the Q4 FY 2021-22 financial results conference call Kansai Nerolac’s CEO, Anuj Jain said: “Passenger vehicle outlook is good because last year a demand was there, but supply chain shortages were there… but gradually I think there is an improvement and quarter by quarter the auto industry is expecting in the passenger vehicle it will be good and pent up demand is there, so I think that the outlook is good. In two-wheelers, last year because of the rural [economy] it was under stress and production growth was negative. Maybe for one or two quarters it will continue, but based on seeing the agri numbers, the way it has gone up and also depending on the monsoon which is expected to be normal, I think maybe post-monsoon the rural demand may pick up. And if we consider that in comparison to the last year, even in the two-wheelers sector we are expecting positive growth.”

PPG Asian Paints

PPG Asian Paints Pvt Ltd is among the largest automotive coatings suppliers in India. The company is a 50:50 joint venture between the two companies. Incorporated in February 1997, PPG Asian Paints claims to offer better value through closely tailoring its offerings to customer requirements and providing superior service. The venture operates four production plants (at Sari, Pondicherry, Moriya and Sriperumbudur) and a single R&D centre in India. Writing in the company’s 2021-2 annual report, Amit Syngle, Managing Director & CEO of Asian Paints said, “The Industrial business delivered robust performance, despite many challenges in the environment. It is good to see that the business has been able to grow exponentially in the last two years with good profitability despite the steep inflationary trends. The automotive coatings business delivered good growth, tackling the dual challenges of uncertain automotive sector demand in a commendable manner.”

Berger Nippon Paint Automotive Coatings Ltd

Berger Paints India has a joint venture with Nippon Paint Automotive Coatings Co., Limited of Japan (NPAU) in the form of Berger Nippon Paint Automotive Coatings Private Limited (BNPA). BNPA deals in coatings for four-wheeler passenger cars and SUVs, three-wheelers and related ancillaries and automotive plastic parts. The company also has a collaboration with Axalta for cathodic electrodeposition coatings for the automotive industry. Berger Nippon Paints supplies automotive paints to commercial vehicle producers such as Tata Motors, Ashok Leyland, Mahindra & Mahindra, Volvo Eicher Commercial Vehicles, Bharat Benz, MAN Trucks India. In the two-wheeler segment, the company supplies Hero MotoCorp, Royal Enfield, India Yamaha Motor, TVS Motor Co., Honda Motorcycle and Scooters India, and Bajaj Auto Limited.