The market was negatively affected by COVID-19 in 2020. Owing to the pandemic scenario, several countries in the region went into lockdown, which halted all the manufacturing and construction activities, thus creating a negative impact on the demand for paints and coatings market. According to the International Monetary Fund (IMF), the GDP growth rate of Europe decreased from 1.6% in 2019 to -7.2% in 2020 and is expected to increase to 4.7% by 2021. The condition is expected to recover in 2021, which is likely to restore the growth trajectory of the market studied.

- Over the short term, rise in the use of protective coatings in the booming offshore wind turbine industry and increasing importance for retro-fitting and rmproving rfficiency of the rxisting housing stock built before 1970 are expected to drive the market during the forecast period. Increasing demand for architectural coatings is one of the major factors driving the growth of the market.

- On the flip side, the unavailability of adequate substitutes for banned lead chromate used in industrial coatings, rise in the prices of raw materials, and negative impact of COVID-19 pandemic are expected to hinder the growth of the market studied.

- Use of nanotechnology in paints & coatings and increase in the demand for bio-based and eco-friendly paints and coatings are likely to act as opportunities in the future.

- Germany dominated the market across Europe due to the increasing demand in the construction industry.

Key Market Trends

Increasing Demand from Architectural Industry

- Paints & coatings are not only used in the interior of the houses to add colors or decorative purposes, but also to perform a wide range of functions. Their functions vary depending upon the type of environment and room that they are used on.

- Paints and coatings are applied on the exterior of the house, not only to give them a new look but also to protect it from blistering summers, freezing winters, soaking rain, and the daily bombardment of UV radiation without fading, peeling away, and cracking.

- Developments in the construction sector are partly due to the robust economic growth and its positive implications on corporate profits, household income, and the state of public finances. The construction activities in countries, such as the Germany, France, United Kingdom etc., are expected to drive the growth of the market.

- Moreover, low-interest rate level, internal migration flows, immigration, and investment backlog that has accumulated in areas, like infrastructure, since the financial crisis is supporting the upswing.

- Renewed focus of European construction companies on local markets and their core business is expected to lead to an increased demand for paints & coatings during the forecast period.

- In Europe, German construction companies are benefiting from soaring demand for real estate and increased investments in buildings. The upswing in construction has been encouraged by the European Central Bank’s ultra-low interest rates, a growing urban population, and high immigration over the past five years. The German government made an announcement regarding its plan to construct around 1.5 million housing units by 2021.

- In United Kingdom, the construction sector contributes to around 6% of the country’s GDP. To provide better infrastructure to the population across the country, the government has planned to invest 1-2% of its GDP in infrastructure between 2020 and 2050 as part of the National Productivity Investment Fund (NPIF).

- All the aforementioned factors are expected to drive the demand for paints and coatings market in the architectural segment over the forecast period.

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Germany to Dominate the Market

- The economic growth of the country is affected by the factors, such as trade tensions leading to reduced exports, and tariff disputes triggered by the US government. However, the country is expected to rise from such fluctuations in economic performance over the forecast period.

- Germany is one of the most affected countries due to the COVID-19 outbreak in Europe. In Q1 and Q2 2020, owing to the severe impact of COVID-19, the nation’s economy has witnessed historical downfall with 2.2% and 10.1% declines respectively (quarter-over-quarter). In Q2 2020, the GDP fall was the largest fall since the beginning of quarterly GDP calculations by Germany in 1970. According to the IMF, the nation’s GDP is expected to witness huge downfall to reach -6% in 2020.

- Germany leads Europe’s automotive market with 41 assembly and engine production plants that contribute to one third of the total automobile production in Europe. The new car market in the country, overall, exceeded three million vehicles, but there was a small contraction in the new car market, due to the introduction of new WLTP emission control regulations, as numerous manufacturers were unable to register new cars.

- The sales/registrations of new vehicles are increasing steadily in the country with improvement in the economy reflecting consumer confidence. The sales of automotive industry in the country has been good in the past few years, as the car sales have increased from 3,822,060 units sold in 2018 to 4,017,059 in 2019. However, in first half of 2020, the German car sales have declined by more than 35.5%, owing to the COVID-19 pandemic. But, it is expected that the automotive sales are hoin to recover by the end of 2021, which would likely provide a stable contribution to the paints & coatings market from the automotive sector in the country.

- Also, Germany has the largest construction industry in Europe. The residential construction segment is expected to have a moderately high growth. According to industry experts, the recent positive migration to the country is stimulating the demand for new residential construction. It is estimated that 3.6 million migrants are expected to arrive in Germany until 2020, requiring at least 350,000 new dwellings per year, which is expected to boost the construction sector.

- However, new housing demand will decrease to around 260,000 per year by 2025 and to 246,000 by 2030. Still, in 2018, the German government made an announcement regarding its plan to construct around 1.5 million housing units by 2021.

- Furthermore, due to COVID-19 scenario, the construction industry halted in 2020, which had an negative impact on the market studied. But, the industry is expected to pick up pace in 2021, thereby driving the market studied.

- Thus, owing to the growth in the various end-user industries in the country, the consumption of paints and coatings is expected to drive the demand during the forecast period.

Competitive Landscape

The Europe paints and coatings market is partially fragmented, with top players accounting for lesser share of the market. Akzo Nobel N.V., BASF SE, PPG Industries, Inc., Hempel A/S, and Beckers Group, are some of the major manufacturers of paints & coatings in the European region.

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