LG catches breath after last year's sprint

Jan-Jul saw CTV sales dip 2%, refrigerators 3.5%.

After the sprint last year, LG seems to be catching its breath. The undisputed market leader in consumer durables increased its market share at a scorching pace in January-July last year but has not been able to maintain the tempo since then.

The competition also has not been able to do anything spectacular in a falling market but consumer durables analysts said LG had built its market share phenomenally last year, which also saw a lukewarm growth in overall sales. "The LG fizz is missing this time round," says an analyst.

Except for washing machines, which saw 8.9 per cent sales growth in January-July this year compared from the same period last year, all other product categories recorded a marginal decline in overall sales""colour television sets by 2 per cent and refrigerators by 3.7 per cent.

Latest ORG Marg data show that in some segments, LG's share has, in fact, gone down in the first seven months of this year compared with the corresponding period in 2004.

Top LG executives say fierce competition and lack of growth in the television, refrigerator and washing machine segments have affected the company's sales.

Says Rajiv Jain, LG's product group head, washing machines, "Our base was small in earlier years. Now the base has grown and there is cut-throat competition. However, we will push growth through an improved marketing strategy and innovative products."

Leading analysts say LG has reached saturation point after gaining 30 per cent market share in most of the consumer durables segments. It will be difficult for the company to maintain the growth momentum, analysts say. For example, LG has been an aggressive price player but can no longer cut its prices.

In washing machines, LG is fighting it out with Samsung and Videocon. In the frost-free refrigerator segment, LG is up against Whirlpool and Samsung. In flat television sets, it is pitted against Onida and Samsung.

In the washing machine segment, Samsung's share has gone up from 12.4 per cent in January to 13.8 per cent in July 2005. Videocon, too, has improved its share from 13.1 per cent to 13.6 per cent. In the frost-free refrigerator segment, Whirlpool's share has grown from 19.1 per cent to 20.9 per cent. Samsung, in this segment, has grown from 16.1 per cent to 17.7 per cent.

LG's market share in the washing machine segment had been hovering around 34-35 per cent in January-July 2005. In contrast, its share had grown from 25.9 per cent to 34.1 per cent in January-July 2004.

In the fully-automatic segment, LG's market share was stagnant at 34 per cent in January-July 2005. In the corresponding period last year, its market share rose 31.7 per cent from 22.9 per cent.

In the semi-automatic washing machine segment, LG's position has stabilised at around 35-38 per cent in the first seven months of 2005. Against this, the company's market share grew from 27.4 per cent to 35.8 per cent in January-July last year.

LG's market share in the refrigerator segment, from January to July 2005, remained stable at 28-29 per cent. Last year, its market share rose from 21.6 per cent to 27.9 per cent.

In the frost-free segment, its share has actually declined from 35.4 per cent in January 2005 to 34.9 per cent in July 2005. The comparable numbers last year were 32.6 per cent and 37.9 per cent.

In the direct-cool segment, LG's position has improved even though it could not match last year's growth. Between January and July this year, its market share grew from 25.3 per cent to 27.6 per cent. Last year, it grew from 19.5 per cent to 24.8 per cent in the first seven months.

Anil Arora, LG's product group head, refrigerators, says,"The company's parent in South Korea has not been able to supply high-end frost-free refrigerators for the last three months. This is one of the factors responsible for the decline in our market share.

This will be corrected soon. The first two quarters of 2005 have not been particularly good with the refrigerator industry growing only marginally."

LG's market share in the colour television segment remained almost flat at 26.9 per cent in July 2005 against 26.6 per cent in January 2005. Last year, it grew from 19.2 per cent to 25.4 per cent.

Ditto on the flat colour television segment where its market share in July was 26.8 per cent against 26.9 per cent in January 2005. Last year, it rose from 22.6 per cent to 28.6 per cent.

(This is a modified version of an earlier story)