Turns out this topic is much like the famous Bill Clinton quote: “It depends on what the meaning of is, is.”
Paint brand popularity and exact market share are touchy subjects among the refinish paint companies. No one wants to be quoted in print as having less market share than the next guy, and there’s no reporting entity that collects paint company sales data. Each manufacturer knows only what it sells, and conjectures what others sell. Part of the confusion also comes from exactly what kind of paint we’re talking about.
Readers of this magazine are probably most concerned with paint used in collision repair, and various paint companies use different terms to define the segments within this industry. Although some see two tiers, I see three separate strata within this segment. In my terminology, they are:
- The economy or value collision segment.
- The standard-issue collision segment.
- The premium, high-production collision segment.
Some paint companies produce a brand offering in all three, some specialize and some have more than one brand in each segment. And, of course, there’s overlap among the segments since the three tiers I’m using are my own device.
Additionally, most of the paint companies we’re all familiar with also offer similar chemistry for fleet paint shops. Fleet can be further divided into general categories like over-the-road trucks, off-road equipment and aircraft. Still another distinct segment that uses refinish paint material are manufacturers of horse trailers, garbage trucks, emergency vehicles and other wheeled items.
Confused yet? Add in the small widget manufacturers that also use refinish-type paint to cover their various products and we’re talking about lots of paint and lots of distinct users.
Defining the Segments
Each of my arbitrary segments are looking for different things from their paint system. For our purposes, when I say paint, I mean the complete liquid offering from a particular brand, including undercoats, solvents, catalysts and topcoats (both color and clear). Here’s how I define the segments:
1. Economy or value collision segment: By my reckoning, selling price drives this segment. For shops in this market, the final price of their repair is driven by bargain-hunting customers. For example, the used-car sales manager at the dealership is trying his best to keep the cost of preparing the used car for sale as low as possible. Or Mrs. Smith wants her car repainted complete for the same $99 she saw advertised on late night TV. Exact color match and quick cycle times aren’t as important to these customers as the final price.
As a result, paint brand offerings within this segment often utilize older chemical technology that has had the research and development costs long since amortized. Not to say that newer technology is never offered within the economy lines (UV cure, for example). But remember, the easiest portions of refinish products to produce are solvents, followed by undercoats, followed by clearcoats. The most expensive portion are the color coats. Huge costs are associated with developing a match for the thousands of new colors introduced each model year. In this segment, exact match isn’t the No. 1 issue, and a full range of new model colors or alternate formulas may not be offered.
In most cases, the product offerings are limited to a few primers, sealers, and clears. Called a short or compact line in the trade, they don’t manufacture 10 different products to suit every shop circumstance. Paint brands within my economy segment typically offer older chemistry, fewer part numbers and overall-only repaint color match. Product training may not be readily available.
Warranties and business-type training add cost for the manufacturer and are unlikely to be offered. Shops competing within the low price market find this mix to suit them perfectly.
2. Standard-issue collision segment: Far and away the largest portion of the refinish market these days are the shops that define our business. Typically producing repairs for insurance companies, these folks are constrained by demands like faster cycle times, high-quality repairs, good color match, easy polishing clears and material cost caps. This is the bread-and-butter segment. As you might imagine, the shops within this segment vary considerably in their requirements and run the full gamut in quality. Some are painting the used cars described above and some are painting new BMWs; some are auto auctions painting a hundred cars a day.
Each paint company competing within this segment wants to accommodate all the individual shop conditions and typically offers a large range of undercoats, color systems (basecoat and direct gloss) and clears, both air dry and force dry, both spot and overall clears and everything at several price points. Your shop wants a powder-sand primer surfacer and a gray shadeable sealer system, the next guy wants a direct-to-metal primer and colored sealers. No matter the circumstances, these main market players have productive, competitively priced products with excellent color match.
Color match is typically the most important criteria to the consumer, and major paint companies spend millions of dollars each year on getting their shop customers the best match quickly. Color match can’t be reverse engineered; each color must be created by adding specific, very carefully manufactured tints, toners and reflectants in tiny, exacting amounts.
Major paint companies also spend millions of dollars on color tools to help painters locate the best matching formula quickly. Just handing out chip books with color swatches printed in ink (not paint) won’t serve today’s painter very well. Many manufacturers have online color retrieval programs that offer the most current formula for any particular auto the next morning after it’s created. Web-based color tools also provide subscribing painters the ability to see which variant formula is the most popular, a long way from a twice-a-year microfiche update. No wonder a pint of paint costs so much.
Paint brands within the mainstream collision market offer a huge range of products in all categories to accommodate the many different shop needs. Color tools of various configurations and shapes help the painter find the best match quickly. Clearcoats run the gamut from air dry spot repair to force dry overall. Training within this large segment includes both technical product and business development schools.
Business development topics include creating standard operating procedures, production and sales best practices, financial benchmarking and insurance marketing help. Not only is there a full range of value-added offerings, there’s a large range in product cost, too. Remember that my arbitrary segmentation isn’t as clear-cut in real life. Many used-car painters and many premium European shops play in this huge middle of the market; there are products priced and designed for both.
3. Premium or high-production collision segment: Often referred to as the European segment, these paint lines offer some combination of very high quality and very productive speed. Many, but not all, brands are actually manufactured in Europe and imported to the United States. In this top-of-the-market segment, I see two types of users, neither looking for cheap products:
1. The owner who positions his shop as an artist. He endeavors to perform the highest-quality repairs possible, and keeping under the DRP material guidelines isn’t nearly as important to him as delivering the best-looking repair. His theory is that the BMW (or similar) owner will pay the additional costs to get the best.
2. Perhaps the larger segment within this high end are shops that are most concerned with extraordinary production speed. These are the shops that were first to buy a heated downdraft and STRSW welders, first to send their techs and managers to training …
They have recognized that it isn’t the cost (or the discount from cost) of paint and materials that make a shop money. Rather, it’s how many cars you can repair in the time allowed, and that’s, in part, a function of how quickly you can get them matched and painted. It’s also a function of having written standard operating procedures, complete estimates, good closing skills and a shop-wide commitment to doing the repair right the first time.
Within this high end, the paint manufacturers offer some of their best chemistry, along with some of their best training. Their value-added services like technical training and certification, shop management best practices, financial benchmarking and insurance company marketing go way beyond the lowest cost for a gallon of clear and offer a true partnership. You’ll never make your shop as successful as it can be by using cheaper products. The best shops succeed by recognizing that they run a business, not just a bump-and-grind repair shop.
If your shop is more concerned with the cost of a gallon of primer than with your close rate, you’re unlikely to see merit in the high-end lines. If, instead, you focus on customer satisfaction, touch times and shop profitability, the training and superlative chemistry of the high end (and the high end of the standard players, too) will suit you perfectly. Remember the substantial overlap between my segments. Many middle collision players also offer superior training and chemistry. It doesn’t have to be from Europe to be top quality.
4. Fleet Repair: While some of the chemistry and products may be similar to collision, this segment is looking for different things from their paint systems. In collision repair, we need clears that can be scuffed and buffed easily the next day. In fleet, they want clears that will stand up to having spray can graffiti removed with lacquer thinner and not dull back. Or clears that will withstand huge temperature changes as the airplane takes off from 100-degree Phoenix and climbs in minutes to 50 below zero at 30,000 feet. Those clears buff like cement.
Color match is still an issue in fleet shops, and an OEM connection to the brand that originally coated the semi tractor helps. But large truck manufacturers in total offer many fewer colors each year than does a single auto manufacturer, making it easier to formulate a match. Off-road fleet painting is almost always a complete repaint on a multi-year schedule, and invisible spot repair blendability is not a concern as it’s similar paint chemistry but has totally different requirements than collision.
Onto Market Share …
If you take into account the three collision segments I’ve delineated, add in the fleet and horse trailer folks, and toss in a few widget manufacturers, you’ll have the total gallonage for refinish paint. To answer the question that Greg Roark asked, I contend that PPG and DuPont share the lead in the market. Depending on how you define the gallonage, depending on what day of the week it is and depending on which way the wind is blowing, I believe they’re within a point or two of each other at any given time. If DuPont has the refinish gallonage lead today, PPG will have it tomorrow. I believe they have equal market share, and if Greg picks a day, either PPG or DuPont will be the biggest selling brand on that day.
That’s not to say the other players don’t have great products and training. They do. The five major refinish manufacturers have been around since at least the 1920s and even the late 1800s in some cases. You don’t survive and prosper that long unless you deliver a winning combination of product, price and service to your customers. Newer players have seen a gap in offerings from the other manufacturers and leapt in to fill the hole the free enterprise system at its best for sure.
Every paint company offers products and services they believe will help their customers succeed. Your shop should choose based on the paint brand’s ability to help you make money. Paying more, or less, for paint is only a small portion of the puzzle. If the average repair order is around $1,500 and the paint and material sale is between 9-10% of the total amount, then the average material sale is between $135 and $150. If the shop grosses 25% on paint and material (my benchmark), they put about $35 toward their gross profit on each repair. Saving another 10% by using a lower-cost product (or demanding additional purchase discounts) or spending 10% more for a better product doesn’t make much difference.
Partnering with Your Paint Company
I know successful collision shops that use every brand in the standard and high-end segments, and they all make great profit. It isn’t the paint brand obviously; it’s how the shop operates. The major paint companies have spent millions of dollars on their “value-added” programs. To add value to their can of paint chemistry, they focus on shop operations, customer satisfaction, employee retention, business generation, insurance company relations and much more.
At the basic level, the paint company should be offering technical training how to apply, repair, match and manipulate their products in the most correct and productive manner. Training should be brand specific within a manufacturer’s offerings. Once past the how-to-use-it phase, the value-added programs talk about collision repair as a business, not painting as a process. Granted, you must first master the idiosyncrasies of your brand (and these days, many front office managers switch brands without accounting for the disruption in production that a new brand brings). Once up to speed (60-90 days), paint production should be suitable no matter your brand.
Meanwhile, the most progressive paint companies and the most profit-hungry shops are focusing on intangibles, not color match or dry times. Getting everyone in the metal shop to hand off work in the same grit to the paint shop, setting time frames and proper procedures for the painters, adopting the most productive equipment and focusing on the number of cars produced, not the cost of a gallon of clear, will win the day in my book.
As my long-time readers know, I also believe the jobber who services your shop can make a big difference in shop profits. The paint manufacturers choose their distributors carefully. They need someone who knows the local market, will match their varied product lines to the correct users and will be the link who brings training to the painters. If all your jobber does is drop off the product and offer a discount, there are better suppliers out there.
Why do the good guys bother? Because if you paint more cars, they sell more paint. A win-win strategy will always be better than a win-lose one.
Pros & Cons
The second part of Greg’s question was, “What are the pros and cons of particular brands?” I believe they include a combination of the following:
Product line depth: Your brand should offer you a full range of undercoats, color coats, clears and specialty products (flex additives, wax and grease removers, etc.). To a degree, your paint line should accommodate you, not the other way around.
Selling price: No product distilled from petroleum is likely to decrease in cost during our lifetime, and insurers will continue to pressure repairers to contain labor and material costs.
Price is important but not the most important element. Paint is a small portion of the total repair. If you increase production times, you’ll reap many more benefits than a cheaper primer can bring. All the players must offer competitive prices. All five majors offer lower-priced brands to compete at every level. No paint company can succeed for long without competitive pricing.
Product performance: Your brand should be simple to use, have several choices of unders and overs, and be very productive (read: fast). It should be easily repairable with no lifting and have an easy-to-polish clear.
Color match: Color match takes thousands of man hours for manufacturers. Watch for more security and protection to ensure the formulas are legally used by only their customers. Color tools lead the painter to the best match quickly. Look for a system that offers real-paint color chips (not ink) and a method to choose among alternate formulas easily. If your shop isn’t currently online in the paint room, you’ll miss many of the most recent color-retrieval advancements. Many shops can’t afford the time to have the painter leave the paint shop, walk to the office and log on. As a result, they often don’t have the latest color information and spend needless time hunting for a match. The cost of some wiring is much less than unproductive painters. Tools like a spectrophotometer make mystery colors easier to locate too.
Training: It costs big money to create and produce training of any kind. Supporting dedicated training centers or renting hotel meeting rooms adds millions to the manufacturers’ cost. Make sure your shop is taking advantage of their expenditure. I believe every lead painter should attend their brand’s school every year. One new trick will save enough to pay for the time away.
Body shop business training will make the difference for the shop of the future. What I learned in six happy, beer-soaked years of business school was that if you can’t measure it, you can’t manage it. If you don’t know what to track (close rate, sales mix, gross margin by category, cycle time, touch time, CSI, average RO value, etc.), you won’t be able to make improvements. As the insurance industry strives to do more business with fewer shops, those who can demonstrate their past performance in metrics that the insurer measures will win that insurer’s business. Insurers are unlikely to award you more repairs because you’re a nice person; earn the business by tracking and improving the results they track.
More value added: Services like facility layout and design, shop 20-groups, links to insurers, marketing and advertising help, and on-site consultations add big cost to a gallon of clear. The manufacturers are trying their best to make the shop their partner, not just their customer. Take advantage of what they know.
Local service and delivery: Jobber support makes a big difference in shop profitability. Look for a supplier who will manage your inventory, provide answers to technical questions without consulting others and can act as a business consultant. The guy with the cheap masking tape and big discount can’t afford to bring much to the party. Buy your paint from someone who will give you local support.
It’s Up to You
What I learned from interviewing the various paint manufacturers for this story is that it isn’t so much the brand you choose as it is what you do with it. Duh. If you read about a tool or training that you’re not currently employing, take this as your cue to find out more about what you’re missing. Cost pressures on collision repair will continue, and customer demands for quality repairs and quickly returned cars will continue. Change your business model to accommodate the things those with the money require, and you’ll not just be a survivor, but a successful one.
Writer Mark Clark, owner of Professional PBE Systems in Waterloo, Iowa, is a well-known industry speaker and consultant. He’s been a contributing editor to BodyShop Business since 1988.