We still see the impact of the disruptions along the entire value chain
How does the current situation, caused by Covid-19 and political impediments, influence the automotive coatings industry?
Frank Naber: The automotive industry was impacted by ongoing pandemic and global shortages of raw materials, intermediates and parts like semiconductors in 2020 and 2021. These supply chain interruptions forced our customers to temporarily curtail or even completely shut down their production. We still see the impact of the disruptions along the entire value chain. Even though the semiconductor situation slightly improves, our OEM customers still do not have sufficient volumes which they require.
In addition, we also see a global tightness of various raw materials which are relevant to the production of automotive coatings. Therefore, we consolidate the raw material supply and shift amounts within our company to keep the production running – or find alternative raw material sources. Escalating raw material and energy prices left their mark on our business environment, too. Despite all these hurdles we continued to focus on our customers and managed the market volatility successfully in very close cooperation. The automotive market showed first signs of recovery beginning of this year. And even if we did not expect a full industry recovery in 2022, the dramatic situation in Ukraine came unexpected and aggravated the market circumstances again. Supply chain interferences and raw material shortages increased due to the conflict between Russia and Ukraine.
Hence, we closely monitor the market developments and take counter measures to mitigate the impact on our customers and our business. So far, we could fulfil our contractual obligations, but the volatility and versatility of events is unprecedented.
What major changes will occur in the automotive coatings industry within the next years?
Naber: Sustainability and digitalisation are key aspects driving changes in the automotive coatings industry within the next years. Sustainability is an integral part of our strategic path with concrete targets e.g., on CO2 emissions. Likewise, our automotive customers – and other partners along the value chain – aim for more sustainable solutions. We need to join forces across company boarders to find smart solutions for a more sustainable future. One example at BASF is the biomass balance approach, where fossil resources are replaced by renewable feedstock in the first chemical production steps.
Digitalisation has developed rapidly and offers various application fields along the value chain. It allows for increasing transparency and more efficient processes in operation and supply chain, and simulation of test methods such as stone-chipping to accelerate product development – just to name a few. One example is “AUROOM”, our online collaboration platform, which is used by OEM designers and visualisers. Both, real and virtual colours look alike and therefore, a virtual collaboration with our customers on colour developments is possible. Supported by new and disruptive digital technologies, we created exciting customer experiences and make our and our partner’s processes even more efficient.