By Jeff Sanford
Toronto, Ontario -- October 6, 2015 -- Axalta Coating Systems announced recently that Steve Markevich has been promoted to Executive Vice President. In this new role Markevich will continue as President of the company’s transportation coatings business, but he will also be responsible for Axalta’s operations in China. This is interesting.
The size of the Chinese population is a mighty 1.3 billion. The country is the new El Dorado of many industries, including the collision repair industry. A couple of the stats mentioned in conversations at last week's Chief Automotive media event brought home the massive business opportunity in this country.
One report suggests there are 100,000 collision facilities in China. This is far more than North America and Europe combined. These shops are typically slotted into one of three categories. Shops in the lowest category can be tiny operations where the techs working have made their own hammers out of salvaged parts. Barely more than cottage industries, these shops do everything from bike repair to banging out dents in the many new cars clogging Chinese roads.
Further up the line are more “western-like” shops. In the top category are advanced and sophisticated operations in major cities like Beijing. A bicycle-based transportation infrastructure is being left in the dust. Vast swathes of the population are taking up the car-based way of life. A new car-based economy made up of every type of vehicle has rapidly emerged over the last 20 years.
Relatively poor former peasants are buying low-priced Chinese Cheri subcompacts. The party elite are buying Ferraris, and lot's of them. In 2008 China became the world's largest auto market. Since then the number of cars produced there has outpaced both Europe and North America—the country is now exporting almost 900,000 vehicles a year.
Companies making up this new auto market include the Beijing Automotive Group, Brilliance Automotive and SAIC Motor (which had a booth at NACE this year). The growth of their products is remarkably robust. In a manner similar to what happened in the west in the early part of the 20th century, people are taking up a way of life that sees a house in the suburbs paired with a downtown job arrived at by car. Through the first decade of this new millennium China built an expensive highway system that has connected the entire country. The project was similar to the creation of the American interstate system of the 1950s. Now the roads are being filled with new cars and new drivers.
When an earthquake rolled through central China collapsing cheaply built government schools some of the first responders were members of the new Shanghai Car Club, which organized an immediate rescue convoy, and arrived at the scene of the disaster before the government could coordinate a response. The government found itself in an embarrassing position, but the incident made it clear that the Chinese are taking their cars seriously at a time when millenials in the west are said to be giving up the car-based way of life.
Could the growth in the auto industry be out of control? Arguably. Beijing has had to limit the number of licenses it hands out each day to 1,000, so crowded have the roads become. The “National Highway 110” traffic jam of August 2010 saw drivers trapped on the roads for two weeks, another incident that alerted officials to the fact that China has seen an almost unsustainable number of drivers (millions) hit the road in just a couple of years.
But as the Chinese like to say, “in chaos there is opportunity.” Today, the rate of collisions among the population is an amazing 75 percent. In North America the number of cars getting in an accident in a year is just 15 percent. So while the single biggest national population on earth gets used to being behind the wheel, it’s also clear there is a massive need for more sophisticated collision repair infrastructure in the country. Craftsman Collision already operates a facility there, and it seems clear that Axalta sees an opportunity as well.
The company is smart in announcing efforts to be part of this once-in-history shift in business. According to a press release announcing Markevich's new job, we’ll the new Executive Vice President publicizing and communicating the many coating technologies the company can provide to multiple industries.
Before joining Axalta, Markevich was CEO of UK-based GKN Driveline. Prior to that, he was President, GKN Sinter Metals, which engineers and manufactures components for engine, transmission and body chassis applications. He joined Axalta in 2013.
For more information, please visit axaltacs.com.