State of the Market November/December 2022

November 9th, 2022 by Nathan Hobbs

Window Film Sector Shows Signs of Positivity in Uncertain Economy

By Nick St. Denis

Note: This issue of Window Film magazine premieres a new department called State of the Market, which focuses on economic factors that affect the window film industry.

The U.S. economy has put out mixed messages for much of 2022, creating high levels of uncertainty among consumers and industries. Fortunately for the window film market, most relevant indicators remain neutral or positive for the near- and long-term future.

Areas of Caution

Overall consumer sentiment in the U.S. has been declining over the past 12 months. Following a severe dip at the beginning of the pandemic, the oft-referenced Index of Consumer Sentiment from the University of Michigan’s monthly Survey of Consumers had slowly climbed from mid-2020 to mid-2021. The index is a key indicator of consumers’ collective outlook on the economy and their personal financial situation.

Since the mid-point of 2021, the index has steadily dropped and now sits at a very low level by historical standards. This suggests consumers are wary of the near-future prospects of the economy, their personal finances and buying conditions.

This is consistent with new vehicle registration data, which is also down through the first half of 2022 compared to 2021. Consumers are pulling back on new vehicle purchases due to rising costs and their own financial uncertainties.

Additionally, while U.S. homeowner improvements and repairs—a relevant gauge for the architectural film market—has been on a tear over the past several years, signs are pointing to a slowdown in this sector. The Joint Center for Housing Studies of Harvard University, which is a leading provider of remodeling activity data, is forecasting a slowdown in 2023.

Areas of Optimism

Despite the above concerns, key indicators more closely related to the window film market are positive. According to the most recent U.S. Market Data from the Specialty Equipment Market Association (SEMA), the annual market size of specialty-equipment retail sales continues to increase year-over-year, with a strong gain in 2021 and projected increases in 2022, 2023 and beyond.

More specifically, the body finishing products market has steadily increased and is now valued at $1.8 billion (according to SEMA) and will remain on a positive trend.

Data from major suppliers in the industry support this assertion. Eastman (with its Performance Films segment) and XPEL are two major manufacturers in the film space and eclipsed a combined $800 million in film-related revenues in 2021. Combined, due to acquisitions and strong organic growth, they have nearly doubled their annual revenues (an increase of 94%) from 2016 through 2021. This suggests the film market is extremely healthy.

What We’re Hearing

Dealers across the U.S. are reporting strong momentum in activity as 2022 nears its end, and while most are hyper-focused on doing what they do best, businesses have been keenly implementing products and services that enhance their main offerings. Paint protection film has been identified as arguably the strongest industry-related prospect over the next five years as consumer awareness increases. Businesses focused on automotive are also offering ceramic coatings and color change wraps, while those on the architectural side report other offerings including graphics/signage and printing.

At the same time, many are dealing with challenges in finding and retaining quality labor. This is a significant concern in an industry that requires many hours of hands-on training and development of technical skills.

Nick St. Denis is the director of research for Key Media & Research, parent company of Window Film Magazine. You can reach him at nstdenis@glass.com.

To view the laid-in version of this article in our digital edition, CLICK HERE.

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