Air conditioner sales double in lean season

Saurabh Baishakhaia, business group head for air conditioners at LG Electronics, had an unusually busy "lean season" this year. But he isn't complaining as sales of home air conditioners almost doubled in the July-September quarter this year.

According to industry estimates, the home AC sales growth rate was 35 per cent in the second quarter of this financial year (traditionally considered to be a slack season) from 20 per cent in the corresponding period a year ago.

Baishakhaia attributes the rising sales to the boom in the retail sector.

"Earlier, there were special outlets that used to sell air conditioners but with retail outlets stocking air conditioners too, the sales have zoomed," he said.

Abhishek Lal, general manager, marketing, Videocon Industries, said. Apart from the retail boom, Lal attributed the changing consumer psyche, greater purchasing power and the falling prices have made ACs as essential items. "While furnishing their house, consumers no longer think that ACs are luxury. That helps to push up sales," Lal says.

The party, however, seems to have just begun, with the festive season expected to push the sales growth to over 40 per cent in the third quarter.

"The good growth is certain to continue," says R T Ranjan, vice-president, sales and marketing, Haier Appliances India.

Currently, the estimated size of the home AC market is 1.6 million units, which is expected to touch 2 million mark next year.

The industry has also seen a dramatic shift from non-branded air conditioners to branded air conditioners. Companies such as Godrej & Boyce Manufacturing have converted the non-branded players into dealers and have leveraged upon their networking skills to get a better grip on the market.

The company calls these dealers 'Face and Service dealers'.

According to George Menezes, COO, Godrej & Boyce Manufacturing (Appliance Division) these 'Face and Service dealers' contribute a major portion to the business of the company, especially the revenue generated from the small office section. The company has 7 per cent market share in the segment.

Following the global trend, the Indian home AC is also shifting focus from window ACs to spilt ACs. "Globally, split ACs have dominated the market and the Indian market has also started following the same trend," says Pradeep Tongnatta, director sales and marketing, Samsung India.

For Samsung, the share of spilt ACs in the overall AC sales was 46.5 per cent. It has gone up to 52 per cent this year. Tongnatta believes that the decreasing price difference between the spilt and window air conditioners along with the easy availability of financing options have made a huge difference. The spilt AC range from Samsung begins at Rs 21,990 while the window AC price begins at Rs 14,990.

Menezes of Godrej says that the trend witnessed in the AC segment is not much different from the one seen in the television market. "The high-end products are moving at a faster pace in all product segments and AC isn't different," he says.