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Yogi Malik reports for PPCJ
Estimated at nearly US$550M (OEM segment) at the end of 2023, the automotive paint and coatings sub-segment is one of the fastest growing in the paint and coatings industry in India. Most of the organised-sector paint producers have started to target the automotive sub-segment in an aggressive manner in recent years.
Table 1- Automotive production trends in India during last six financial years
| Category | 2018-19 | 2019-20 | 2020-21 | 2021-22 | 2022-23 | 2023-24 |
| Passenger Vehicles | 4,028,471 | 3,424,564 | 3,062,280 | 3,650,698 | 4,578,639 | 4,901,844 |
| Commercial Vehicles | 1,112,405 | 756,725 | 624,939 | 805,527 | 1,035,626 | 1,066,429 |
| Three Wheelers | 1,268,833 | 1,132,982 | 614,613 | 758,088 | 855,696 | 992,936 |
| Two Wheelers | 24,499,777 | 21,032,927 | 18,349,941 | 17,714,856 | 19,459,009 | 21,468,527 |
| Quadricycles | 5,388 | 6,095 | 3,836 | 4,061 | 2,897 | 5,006 |
| Total | 30,914,874 | 26,353,293 | 22,655,609 | 22,933,230 | 25,931,867 | 28,434,742 |
Data source- Society of Indian Automobile Manufacturers (SIAM)
Growth in the automotive paint segment is spurred on by the country’s rapidly growing automotive market, which is projected to reach US$300bn by 2026. This growth is fueled by various factors, including rising income levels, urbanisation, and a burgeoning middle class with increasing purchasing power.
Indian automotive production (including two-wheelers) crossed the 28 million mark in 2023-24’s financial year, indicating a brisk demand for automotive paint and coating products from the OEM sub-segment.
Commenting on the automotive sales data of 2023-24, Vinod Aggarwal, President of the Society of Indian Automobiles Manufacturers (SIAM) said, “Against the backdrop of a robust economic growth of 7.6% based on conducive policies of Government of India, the Indian Automobile Industry has posted a satisfactory performance with domestic industry growing by 12.5% during the last financial year.
“Passenger vehicle segment led the growth with overall sales touching almost 5 million units including 4.2 million domestic (growth of 8.4%) and 0.7 million exports.
“Two-wheeler has emerged as one the most important sub-segments for automotive coating producers. In the March 2024 concluded financial year, the two-wheeler segment continued the recovery path with a handsome growth of over 13% in domestic sales to almost 18 million units, even though it’s still lower than the earlier peak of 21 million units in FY19.
“Domestic Commercial Vehicle industry had a marginal growth to 0.97 million units and within that, some drop was experienced in LCVs and SCVs due to de-growth in CNG segment.
“Another key feature of the Indian automotive paint demand is that growth in value has surpassed the growth in volume by high percentage points. Increased consumption of high priced automobiles has led to increased consumption of premium and super premium coating products in Indian automotive industry.”
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The major driving forces
On the supply side, Kansai Nerolac, a subsidiary of Japanese paint major Kansai, is the largest player in automotive paint segment in India. It operates a total of eight strategically located manufacturing plants. In the current year and the company is planning to increase capacity of automotive and industrial paints by 850Mt/month at its Sayakha (state of Gujarat) and Bawal (state of Haryana) plants, with a total capital expenditure of INR495M.
Speaking during Kansai Nerolac’s financial result presentation in May in Mumbai, Anuj Jain, CEO said, “Paint demand has been good in the automotive segment. In fact, automotive penetration in India is low, and generally in the last 10, 15, 20 years, we have seen that demand is cyclical. But as the country is progressing, the infrastructure is progressing and we believe that going forward, the automotive paint demand is not going to be that cyclical – it is going to be stable. So that’s good news for us, because we have our largest market share in automotive. In two-wheeler, our market share is very, very high. During the first six months the demand was lagging. However, in January-March 2024, the demand has picked up. That’s a good sign for us. And again, a lot of new products, new technology, new innovative products we have launched in this market.”
PPG Asian Paints is a 50:50 joint venture (JV) between Asian Paints, India’s largest producer of decorative paints, and the US-based PPG Industries, a leading supplier of automotive paints in India. Benefitting from the brands of PPG Industries and Asian Paints, the JV also enjoys a wide distribution network of Asian Paints and strong technological support from PPG Industries. The company is one of the largest player in the automotive OEM paint segment and automotive refinish business segment. It has renowned brands in Automotive OEM segment such as Powercron, Electroclear, Duranar, Envirocron, EPIC 200, XYLAN and Truform. It has a strong presence in the refinish premium segment, with brands such as 2K Nexa.
Other leading paint producers such as AkzoNobel, Berger Paints, JSW Paints, and Indigo Paints are also paying more and more attention to the OEM and auto refinish sub-segments.
An executive from leading paint producer AkzoNobel India told PPCJ on the condition of anonymity, “While the overall paint and coatings industry faces potential risks stemming from fluctuating crude prices, macro-economic environment, and inflationary pressures, the short and medium term outlook remains promising. This optimism is fuelled by India’s projected medium-term growth rate of 6-7%, which sets a favourable backdrop for the automotive industry’s expansion and development, which drives the demand of automotive coating products.”
