Paint companies have been announcing sizable price increases over the past several months due to “unprecedented” rising costs for raw materials, and recent reports indicate that the costs of raw materials are continuing to rise faster than the paint companies anticipated. That could mean there may be even more price hikes coming in the second half of the year.
Michael H. McGarry, chairman and CEO of PPG Industries, said in the company’s quarterly conference call in July that PPG has experienced “unprecedented levels of raw material and transportation cost.”
“This drove raw material inflation to be up a mid- to high-teen percentage on a year-on-year basis compared to our original estimate of a high single-digit percentage increase. Clearly, this inflation cycle is much higher than anyone anticipated, and we’re continuing on a business-by-business basis, working to secure further selling price increases. This includes executing additional pricing actions during the third quarter.” Having raised their prices twice already in the past 12 months, CEO McGarry added that what they are studying is the need for a third set of price increases.
PPG is not alone, according to a sampling of pricing notices received by shops in the U.S., paint manufacturers AkzoNobel, Axalta, BASF and Valspar have also each raised prices twice since the fourth quarter of last year. Axalta also announced a second global price increases to close the price-cost gap that widened during the second quarter, adding that they would implement a third round of price increases “as the situation merits”.
After multiple price hikes among five different paint manufacturers, repairers have been subjected to an average cumulative price increase of slightly more than 11 percent just since the fourth quarter of 2020. If history is any guide, repairers may be extremely challenged to pass on these historic increased costs to insurers. The average annual increase in paint and materials has only been 3.1% since 1998, according to CCC’s records, while over the past 10 years, the figure is 2.2%.
This article courtesy of John Huetter of Repairer Driven Education (RDE). Check out their website at; http://www.repairerdrivennews.com/ for this and many other informative and educational articles on the collision repair industry.