PPG: Driving growth
After having already announced several deals at the turn of the year, PPG has recently acquired the Germany-based company Cetelon Lackfabrik, a manufacturer of coatings for automotive and light truck wheel applications. Through this transaction PPG bolsters its portfolio in the automotive segment.
Cetelon develops and manufactures a wide range of coating systems for the wheel industry, including certain proprietary technologies. It operates production and sales offices in Ditzingen, Germany, from which it serves many leading wheel suppliers worldwide. Founded in 1948 in Stuttgart, Germany, Cetelon became part of the Berlac Group in 2011. The company employs approximately 95 people globally.
The automotive industry is a core business for PPG. The company has leading positions in OEM, “Tier” suppliers to OEM, and refinish coatings. Overall, the industry accounted for around 28 % of PPG’s sales in 2020, stated Roald Johannsen, PPG vice president automotive OEM coatings EMEA.
Automotive coatings demand to grow
According to consulting firm Kusumgar, Nerlfi & Growney (KNG), the total size of the automotive OEM coatings market reached a volume of almost 2.2 million metric tonnes and a value of roughly USD 13 billion. The volume for coatings for cars and light trucks was 1.17 million metric tonnes. The consultants expect the volume to grow by 2024 and reach 1.33 million tonnes. The ChemQuest Group, a global business strategy and external specialty chemicals technology development firm, saw the market at 2 billion litres and USD 11.3 billion and forecasts a market size of 2.2 billion litres and USD 13.1 billion
“Across all of our businesses, we are interested in strategic acquisitions that provide geographic expansion, product line extension, complementary technologies or sustainability benefits”, Johannsen said.
The addition of Cetelon’s wheel coating technologies will allow the coatings producer to further build on its existing coatings product portfolio, liquid and powder coating technologies and colour matching capabilities. “Wörwag’s industry expertise in powder and liquid coatings for industrial and automotive applications is highly complementary to our business, and will help to further expand our product offering. It will enhance our water-borne, direct-to-metal, liquid and powder coatings offerings. Both acquisitions are complementary to PPG’s existing customer base and will continue to allow us to continue to deliver solutions and growth in key geographies”, Johannsen said.
Car production decreased by 16 % in 2020
According to the International Organization of Motor Vehicle Manufacturers, global automotive production fell by 16 % last year. Regionally, the United States saw automotive production drop by 19 %, slightly more than average worldwide. In Europe, production fell by 21% on average, with its main producing countries reporting drops between 11% and almost 40%. Asian producers fared better than vehicle manufacturers elsewhere. Automotive production on the world’s largest continent fell about 10%, and the OICA reports that China’s accelerated recovery led vehicle production there to fall only 2% over the course of the year. Asia accounts for a 57% share of global vehicle production. The 2020 results follow up on negative results from the year before. In 2019, world auto production fell 5%, ending a ten-year streak of growth. On the bright side for automobile manufacturers, the OICA says the last few months of 2020 saw gradual recovery in consumer demand for trucks and cars.
Three questions to Roald Johannsen
European Coatings spoke to Roald Johannsen about the situation at the automotive coatings market.
The automotive industry suffered last year. The signs are now pointing at a recovery. What development do you expect?
Roald Johannsen: Demand from the automotive sector was affected as a result of the global Covid-19 pandemic but has since been recovering. In the first quarter of 2021, sales volumes for automotive refinish coatings were up a high-teen percentage. Automotive OEM coatings sales volumes rose a low-teen percentage in aggregate, with differences by region, and remained above global industry auto production rates.
How do you rate the market for automotive coatings?
Johannsen: The automotive industry offers attractive growth opportunities for PPG, particularly with the ongoing shift to battery electric vehicles (EVs) where there more coating opportunities exist in the both the battery pack and cell. Experts predict that annual production of EVs will be 7-10 million by 2025 and rapidly rising to 25 million by 2030. As well as traditional coatings that protect and beautify, PPG offers other key technologies for this market, including thermal conductive fillers, adhesives and sealants, dielectric protection, and battery fire protection.
What role does the market in Germany plays for your activities?
Johannsen: Germany is a key part of PPG’s manufacturing and R&D footprint with 11 locations and approximately 1,450 employees, as well as being a key market. Germany is also the largest car market in Europe and is particularly well positioned for the transition to EVs. The German market is well-known for highly innovative small and medium-sized enterprises (SMEs), and these companies are very complementary to our portfolio.
PPG also provides global reach for these companies as all our customers are global. We further strengthened our position in Germany in 2019 with the acquisition of Hemmelrath Lackfabrik, an automotive OEM coatings manufacturer based in Klingenberg.
