Change

The Transportation segment covers parts manufacture, assembly and maintenance of cars, trucks, ships, airplanes, trains and all other products that facilitate movement. Our specialty chemicals are key parts of the process that make components and coatings play an important functional role in terms of protecting the underlying vehicle, but are also vital for aesthetics. We recognize the following three sub-segments in Transportation:

Automotive OEM, parts and assembly

  • Interior and exterior components and systems for cars and trucks, including:
  • Bumpers
  • Instrument panels
  • Wheels
  • Assembly of cars, light vehicles and commercial vehicles

Automotive repair

  • Aftermarket refurbishment and modification of cars and trucks
  • Repair of damage to cars and trucks

Marine and air transport

  • Ship and yacht new build
  • Ship and yacht maintenance, repair and refurbishment
  • Airplane new build
  • Airplane maintenance, repair and refurbishment

Percentage of AkzoNobel revenue

  • 15 percent

Examples of AkzoNobel products sold into this segment

  • Specialty coatings used for interior (e.g. instrument panels) and exterior (e.g. bumpers) automotive plastics
  • Powder coatings for automotive components, such as wheels and engines
  • Chlorine, organic peroxides and metal alkyls used in the production of automotive plastics
  • Automotive refinish coatings
  • Marine and yacht coatings for new build and maintenance
  • Aerospace coatings for new build and maintenance

Trends

The Transportation segment is expected to continue growing, with a geographic shift of demand and manufacturing to high growth regions. Increased use of lighter, alternative materials is also forecast. Within the sub-segments, in Automotive OEM and parts and assembly, the dip experienced during the global recession was marked. However, the recovery has been quite robust, with continued strong growth in high growth regions and moderate growth elsewhere. The Automotive repair sub-segment is expected to continue being more stable and geographically broad, but with much lower growth. Vehicle car miles driven are increasing, but both accident rates and repair rates per accident are falling due to extra safety features, while many motorists are delaying small repairs due to the difficult economy. The Marine and air transport sub-segment has seen a major drop in shipbuilding and reduced maintenance spend as shipping rates decline, with some evidence of increased use of more basic materials for repair. Airplane passenger miles continue to rise, keeping demand for maintenance more stable.

Future sustainability developments

Sustainability-related concerns and, in particular, the need for reduced energy use in Transportation are important issues in terms of customer/consumer demand going forward. According to the WBCSD’s Vision 2050 report, universal access to low carbon transport is expected by 2050. An 80 percent reduction in energy use by light duty vehicles is also forecast, along with a 50 percent drop in shipping/freight transportation. This will create challenges and opportunities for suppliers to this end-user segment.

Implications for strategy and actions

In response to the trends in this segment, we will continue to focus on launching innovative products to improve functionality, sustainability and margins, and deliver better value for customers. A particular focus area will be ensuring we have the right products as customers shift to new, lighter materials. For high growth areas in particular, we need to ensure we have products with appropriate cost-to-serve/value trade-offs. We must also leverage our global scale to improve efficiency and effectiveness, and continue restructuring in lower margin segments and geographies with limited growth potential.

Vehicle (car) miles driven1
Billion car kilometers

Transportation – Vehicle (car) miles driven (line chart)

Freight rates2
ClarkSea Index $ earnings/day

Transportation – Freight rates (line chart)

Motor vehicles and parts production3
 $ billion, value added

Transportation – Motor vehicles and parts production (line chart)

Sources: (1) IRF / Euromonitor International (2) Clarkson Research Services Limited (3) Oxford Economics.

Keyword Search
Copyright © 2013 Akzo Nobel N.V.