Transportation

We supply a comprehensive range of advanced coatings and color technologies for virtually every type of transport, from ships, yachts, trucks and construction equipment to planes, trains and automobiles. We also produce a variety of specialty chemicals that are used in the production of automotive systems and components.

Trends

The 2008-2009 recession led to a structural change in the Automotive OEM, parts and assembly sub-segment. Although the market quickly returned to growth and recovered to pre-recession levels globally, the regional mix has changed dramatically, resulting in a knock-on impact in terms of parts production. Specific changes include:

  • Automotive production in Europe has recovered, but not to pre-recession levels. Going forward, production growth is expected to be limited
  • In North America, production has returned to pre-recession levels following a robust recovery, but growth is expected to be significantly below other sectors of the North American economy
  • Growth in China has been considerable and the region has outstripped North America in terms of vehicle production. Future growth is expected to be at or slightly below China GDP growth

It’s a different scenario in the Automotive repair sub-segment, where the key drivers are the number of vehicles on the road, the insurance rate and the repair rate. In terms of the vehicle car park, slow, stable growth continues in more mature geographies with higher growth rates in countries such as China and India. The expectation is that in the medium term, the number of vehicles on the road in Brazil, Russia, India and China combined will surpass first the North American and then the European vehicle car park.

The most uncertain outlook in Transportation concerns the outlook for the Marine and air transport sub-segment. Although we anticipate reasonable growth in aerospace, there is still a great deal of uncertainty around marine new build. This particular market is late cycle cyclical, as it takes some time for the impact of a recession to be felt, evidenced by the accompanying chart. The expectation is that the market will return to growth in 2015. As our business today is disproportionately oriented towards the new build market, this is important for AkzoNobel. The marine maintenance market is more stable, but has also been somewhat depressed. We expect lower oil prices to be a positive factor driving growth in maintenance going forward.

Future sustainability developments

Based on the WBCSD Vision 2050, by 2050, an 80 percent reduction in energy use by light duty vehicles is expected, along with a 50 percent drop in energy use in freight transportation.

Implications for strategy and actions

As production and the car park continue to shift, we must ensure we are well positioned geographically – both in terms of supply and decision-making. We also need to have products with the right functionality, aesthetics and price level to consistently meet requirements in this demanding segment. Finally, we need the right organization in marine to maintain margins and take advantage of the return to growth when it occurs.

Transportation – Fields of application (illustration)Transportation – Fields of application (illustration)