LOS ANGELES - The automotive coatings manufacturing industry's performance has been streaky during the past five years. However, according to a report by market research firm IBISWorld, industry revenue is expected to grow 3.5 percent in 2012 to $1.3 billion. The recession has had lingering effects on the industry, with consumers holding off nonessential vehicle alterations and new vehicle purchases hurting demand for automotive coatings, said IBISWorld industry analyst Nima Samadi. At the onset of the economic turmoil in 2008, automakers had already been experiencing reduced consumer demand for new vehicles. Things took a turn for the worse in 2009, as U.S. vehicle sales fell to historic lows and motor vehicle manufacturing revenue plummeted. The severe decline in demand for new automobiles reduced the sector's demand for automotive coatings. However, motor vehicle manufacturing revenue has rebounded aggressively from 2009 to 2012. The success of the past few years has helped reinvigorate demand for automotive coatings from motor vehicle manufacturers.

The recession has also had lingering effects on the car body-shop industry, which is a major market for automotive coatings. Because consumers held off on essential repairs and pulled back on discretionary services like automotive coatings, this market segment reduced purchases of automotive coatings during the recession. Car body shops also derive revenue from customized coatings and finishes. Customized coatings are a discretionary luxury, since coatings are an aesthetic non-operational feature of a vehicle; as such, drops in consumer and discretionary spending levels hurt industry demand and revenue. However, industry demand has been encouraged by several new styles of automobile coatings, including coatings with ultraviolet light-cured finishes and coatings that incorporate nanotechnology.

Water-based coatings are the future of automotive coating technology and are expected to boost demand for coating customization, given their ease of use and lower potential cost once the technology is widely adopted. All of these factors bode well for the automotive coatings manufacturing industry. Industry firms will experience growing demand for their products over the next five years, prompted by an expanding economy. Revenue is expected to grow in the five years to 2017.

For additional information about the report, visit www.ibisworld.com.