This is my last blog post for 2013. It was a difficult year, yet with some great opportunities for developing new geographical markets. It is obvious that economic slowdown will continue in 2014. European Union, the world’s largest economy, is facing a second wave of crisis, and definitely not only in PIGS countries (Portugal, Italy, Greece, Spain). France is on the edge of recession, UK must cut budget expenses, and even Germany, will have problems, since someone must be importing their cars and machinery to feed the growth with exports, and the European market is Germany’s biggest customer.
However, what I would like to pinpoint in this post is the absolute need for smaller players in the automotive collision repair market to find new competitive advantages over the big industry sharks. Business is slowing down, and big automotive coatings producers one after another put more weight on their B-brands or so-called economic product lines.
I have to say that in many cases those product lines are incomplete or even of lower then average quality. If Etalon, or any other refinishing supplies producer or supplier would adopt the quality standards like some of “premium economic” product lines, most probably the customers would be very strict with us. No doubt about that.
Don’t misunderstand me. Leaders in automotive coatings industry know about quality, but…they have to keep their margins on all market segments. Shareholders, stakeholders, dividends, huge fixed costs; all these do not allow them to drop their profit margins. Therefore in order to keep the profits levels up, they must compromise on quality, marketing or the range.
In 2014 we will experience further growth of economic product lines in car refinishing sector. In many countries, importers use the holes in the legislation and turn back to cheaper and less energy hungry solvent-based paints. Thus, the competition in this market segment will be fierce. This is why smaller companies, which do not have a status and brand-awareness of their bigger piers, must invest on affordable quality of their products. High quality alone or cheap price alone will not do. Only the combinations of two, the golden mean, will provide long-term sustainable business.