In 2023, China’s automotive coating industry saw the largest growth in output and consumption in nearly a decade. The impressive 12% growth was driven by an automobile production boom in China. Chinese automotive coating marke, valued at around CNY 41 billion, comprises over 300 large, medium, and small-sized enterprises. After experiencing a period of stagnation for two years, the industry witnessed a significant growth in the past year. Multinational coating manufacturers currently control over half share in China’s automotive coating market, such as PPG, BASF, Kansai, Nippon Paint, Axalta, KCC and other leading automotive coating manufacturers and suppliers.

The surge in China’s car output helped local automotive coating manufacturers achieve record production figures. In 2023, China’s car output exceeded 30.16 million units, surpassing the historical high of 28.6 million units in 2017, representing an 11.6% year-on-year increase, and total car sales during the year hit more than 30.09 million units, up 12% year-on-year, according to China Association of Automobile Manufacturers (CAAM). China’s car exports surged 58% year-on-year to a record high of 4.91 million. Cui Dongshu, secretary-general of China Passenger Car Association, believed that the new records in car outputs and sales represent new opportunities. These figures boost market confidence.

Across China, there are currently around 240 automakers. In 2023, around 20% of them produced fewer than 1,000 units, and about 17% produced less than 10,000 units. On the other hand, nearly 15% of Chinese automakers had a capacity utilization rate of more than 95% in 2023, accounting for 47% of the total output for that year. The significant growth in the Chinese automotive coatings industry is attributed to continuously optimizing production structures and efficient capacity utilization. Since the establishment of the first automotive coatings manufacturer in the 1960s, Chinese automotive coatings industry has come a long way, evolving from a stage close to the bottom of the pyramid to becoming the world’s largest automotive coatings producer by volume.

Despite China’s real estate crisis, which has dampened growth in the architectural coatings sector, the healthy development of the automotive coatings sector has played a crucial role in boosting Chinese coatings industry. Nipsea Group, parent company of Nippon Paint China, brought a new plant online with an investment of CNY 960 million (USD 133 million) in Tianjin in June 2023. The Tianjin plant focuses on producing industrial coatings to meet surging demand from China’s automotive sector. Nippon Paint China currently runs 70 plants with around 11,000 employees across the country. Wee Siew Kim, CEO of Nipsea, mentioned in a press release that while they are currently strong in the automotive segment, this sector is undergoing significant changes. And hybrid vehicles are also gaining in popularity.

Another leading automotive coatings supplier, BASF Coatings (Guangdong) Co., Ltd., expanded the production capacity of automotive refinish coatings at its coatings site in Jiangmen, Guangdong Province in South China in 2022. With the completion of the expansion, BASF’s capacity of automotive refinish coatings has been increased to 30ktpa. This is in line with the company’s pledge to maintain customer proximity, as well as to strengthen BASF’s position as a leading and innovative coatings supplier to the automotive industry in China and the rest of Asia. China has prioritized enhancing manufacturing capabilities as a key policy agenda, aiming to raise the global standing of Chinese manufacturers through the advancement of the industrial chain. The automotive coatings industry is no exception. The consumption growth of high-value-added products far exceeds the industry average. The rise of new energy vehicles is gradually reshaping the Chinese automotive coatings industry.

The year 2023 marks a turning point for the Chinese automotive coatings industry, showcasing not only its strong growth potential but also reflecting numerous opportunities and challenges for the future. Driven by the rise of new energy vehicles and shift in market demands, China’s automotive coatings industry is heading towards a more advanced and diversified future.