Paint and Varnish Wholesalers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 940 paint, varnish, and supply wholesalers in the US act as middlemen between manufacturers and a variety of end users, including retailers, other wholesalers, collision repair centers, OEMs, and building contractors. Special purpose coatings, which include automotive paints, account for over 40% of industry sales. Architectural coatings account for one third of industry sales. Other products include architectural coatings, enamels, primers, stains, solvents, and lacquers; paint supplies (brushes and rollers); OEM coatings; and wallpaper and wallpaper supplies.
Dependence on Automotive Collision Repair Business
Because automotive paint and coating sales account for a significant percentage of the market, the industry is influenced by demand from the vehicle collision repair market, which consists primarily of small independent businesses.
Dependence on Construction Industry and Economy
Demand for architectural paint and coatings is dependent on the health of the construction industry, which is cyclical and influenced by economic conditions.
Industry size & Structure
The average paint, varnish, and supply wholesaler employs 20-22 workers and generates $7-8 million annually.
- The paint, varnish, and supply wholesale industry consists of about 940 firms that employ 20,000 workers and generate $7 billion annually.
- The industry is concentrated; the top 50 companies account for about 84% of industry revenue.
- Large automotive paint, body, and equipment (PBE) wholesalers include LKQ Corporation and ThePaintStore.com. Large manufacturers of paints and coatings include PPG, Sherwin-Williams, and RPM. Sherwin-Williams is one of the largest wallpaper distributors in the US.
Industry Forecast
Paint and Varnish Wholesalers Industry Growth
Recent Developments
Sep 23, 2024 - Architectural Billings Decline
- Demand for building design services declined in August compared to the prior month, marking continued softness for architectural billings, according to a September report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) declined to 45.7 in August from July’s reading of 48.2. Any reading of 50 or more indicates growth in architectural billings. August was the nineteenth consecutive month to see a downward trend in billings. The score for new project inquiries was flat at 52.4 in August, but the index for the value of new design contracts increased from 46.5 to 47.3. The AIA’s Chief Economist, Kermit Baker said, “Unfortunately, even the impending interest rate cuts didn’t move the needle on project inquiries or new design contracts at architecture firms. Hopefully, once the trajectory of further cuts gets clarified, delayed projects will restart, and new projects will gather momentum.
- High interest rates have increased the costs for new multifamily construction and reduced property values, prompting some developers to halt or delay projects, according to The Wall Street Journal. Multifamily housing starts involving five or more units fell 21.8% in July compared to July 2023 and were down 41% from their April 2022 peak. The drop in starts follows a boom in apartment building that began during the pandemic. This year, about 610,000 apartment units are expected to come online, the most in any year since the 1980s, according to data firm CoStar. However, as financing new projects has become costlier, CoStar expects new apartment supplies to slip to fewer than 350,000 units in 2025 and 275,000 in 2026. The influx of new apartment building has created an oversupply in some regions, leading to lower property values and weak rent growth, which has reduced developer and investor appetite for new projects. Multifamily construction activity is a key driver of new appliance demand.
- The number of building permits issued for single-family, privately-owned housing units, a demand driver for building inspection services, increased 2.8% month-over-month but declined 0.5% year-over-year in August 2024. Single-family housing starts grew by 15.8% month-over-month and increased 5.2% year-over-year in August. Single-family housing completions dropped 5.6% month-over-month but grew 8.4% year-over-year in August. The August rise in housing starts was helped by moderating interest rates. However, builders still face supply-side headwinds, including labor and lot shortages and stubbornly high prices for some types of building materials, according to the National Association of Home Builders (NAHB).
- Home builder confidence in the single-family market improved in September amid moderating mortgage interest rates, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose two points to 41 in July 2024. Any HMI reading over 50 indicates that more builders see conditions as good than poor. September’s gain in the HMI followed four consecutive months of declines. The HMI survey also showed that 32% of builders have reduced home prices to lure potential buyers off the sidelines, although the average price reduction of 5% was the lowest since July 2022. However, while the Fed’s recent rate cut will reduce the cost of land development and construction loans, builders are seeing increased competition from existing home listings in some markets.
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