[Atlas Europe] Paint : Coronavirus halts a market evolution

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“The year 2020 should have been an exciting year, but Covid-19 disrupted it. Our repair activity in the first quarter started with excellent results all over Europe” says Josep Guiro (Country Cluster Manager France, Iberia, Middle East and Africa - AkzoNobel Vehicle Refinishes EMEA), disappointedly. “In several markets our distributors were preparing to invest in their development, in their facilities or to improve services. This excellent economic mood was suddenly interrupted”.

This observation is shared by all paint manufacturers. Between them, various acquisition plans, some hostile some not, over the past three years* have been put on hold. Observers say, however, that Axalta is still on the market. There are too many “big brands” given the structural drop in the number of car accidents. But paradoxically, there is still room in Western Europe for those offering quality products at a reduced cost. This encourages the big manufacturers to offer ranges specifically to compete with “B brands” like General Paint, Lechler and Sinnek.

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The Covid crisis has also halted the concentration of distributors, often dominated by general parts suppliers rather than paint specialists, which had started a few years ago in many countries. In the second half of the year "with workshops mostly closed and consumers in lockdown, the majority of the market’s players experienced a severe drop in demand. But at the end of lockdown sales started to increase” says Fabien Boschetti, Director, BASF Global Marketing Automotive Refinish Coatings Solutions. For him, the less competitive distributors will emerge weakened from the crisis. "The better performing distributors will benefit from the digitalisation of the sales relationship, stock management and customer pipeline to reinvent and strengthen themselves", he predicts.

“The main challenge for companies now is to harness their capacities, liquidity and flexibility to adapt to an economic environment changing like never before” adds Josep Guiro. Conversely, those who emerge weakened from this crisis, struggling to adapt to the changes in the repair business, will be easy prey.

“European parts distribution is going international. Distributors used to be very local, but now we are seeing more and more players expanding in several countries. They often offer a wide range of product categories to expand geographically by buying local businesses”, explains Fabien Boschetti. The thaw in the market could therefore see concentration in southern Europe accelerate. This could be further strengthened in France and Germany where modes of distribution remain diversified.

Nicolas Girault

*Around PPG, Akzo Nobel and Axalta.

Find all of the exclusive information from the Zepros Auto's European IAM distribution Atlas HERE.