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Air-conditioner and refrigerator manufacturers are staring at the prospect of a double-digit growth in business this summer, following a persistent heat wave that has gripped most parts of India in the past few weeks.
This comes after two years of flat growth in the two categories. In the past two years, air conditioners and refrigerators barely crossed 3.4-3.5 million units and 11 million units, respectively, as cool summers bogged down business. Last year was particularly bad with the early onset of rainfall.
But this year, April saw brisk business with air conditioner and refrigerator makers seeing a nearly 10 per cent growth in sales over last year, which is expected to increase to about 15-20 per cent in May. "Besides the heat wave, there is pent-up demand, which is pushing up growth levels this year," says Shantanu Dasgupta, vice-president, corporate affairs & strategy, Asia, South, Whirlpool.
Rupee depreciation and inflation in the last two years meant that refrigerator and air conditioner makers increased prices by eight-10 per cent in the period, driving consumers away who regard these items to be discretionary in nature. After holding back purchases for two years, consumers now seem eager to spend, Dasgupta said, egged on by the weather.
Air conditioner makers, in particular those which derive close to half of their business in summer (refrigerator makers get a third of their business during the April-June quarter), are excited about the double-digit sales growth they are seeing which they attribute to energy efficient models, cheap financing and aggressive after-sales service.
Manufacturers from LG to Samsung, Voltas, Panasonic, Whirlpool, Hitachi, Godrej have all refurbished their line-ups in keeping with the step up in energy labelling that kicked in earlier this year. "This means a five-star rated AC last year is a four-star AC now and a four-star rated AC last year is a three-star AC now," says Saurabh Baisakhia, business head, air conditioners, LG.
Most manufacturers have also used the occasion to introduce new product innovations and features compelling consumers to buy. LG, for instance, has introduced ACs this year which have what it calls a mosquito wave technology that helps drive the insect away when switched on, Baisakhia explains. Rival Voltas, on other hand, says its president and chief operating officer, unitary products business group, Pradeep Bakshi, has been aggressively pushing its all-weather AC in multi-brand retail outlets to help drive sales.
Suresh Kumar Bandi, divisional deputy managing director, Panasonic and Varghese Joseph, vice-president, sales, Hitachi Home & Life Solutions say that they are aggressively pushing energy efficient models that can help bring down utility bills by almost half. The two companies have launched almost 60 new models respectively across price points in a bid to attract consumers.
The market operating price, says Bandi, for three to four star-rated split air conditioners this summer is Rs 32,000-35,000, while window ACs cost Rs 23,000-25,000. The starting price for 180-190-litre single-door refrigerators (the most popular) at the moment is Rs 10,000-11000, while 240-260-litre double-door refrigerators come for nothing less than Rs 19,000-20,000 at the entry level, trade sources said.
