Owing to the delay in the advent of summers in most parts of the country, the sales of air conditioners (ACs) declined by 30 per cent in April, compared to the year-ago period. However, AC manufacturers hope to make up for the lost ground in May, as temperatures are expected to rise then.
April is a most key month for AC sales, and accounts for 16-18 per cent of the annual sales.
Ajay Bajaj, business head (ACs), LG Electronics India Pvt Ltd (LGEIL) said, “Generally, April is expected to be a bumper sales month for all AC brands. This time, April witnessed a sharp decline in sales of about 15-20 per cent, compared to last year due to low temperatures.” LGEIL’s ACs sales projection for 2012 is 15 lakh units. This translates to 30 per cent of industry’s total sales projection of 45 lakh units.
Hitachi also reported sluggish sales of ACs in April. Gurmeet Singh, vice-president and head (sales and business planning), Hitachi Home and Life Solutions (India) Ltd, said, “ACs sales cuts across the financial year from January to June. In the first three months of the calendar year, the market performed well, registering about 10-15 per cent growth over the last year. However, April noticed a de-growth of about 30 per cent. But Hitachi managed to grow in a small way in April because of the launch of mass segment AC models–Kaze. Overall, we grew about 55-60 per cent from Jan to March 2011.”
LG's Bajaj said the scenario would improve in May. “With temperatures rising in the North from the month of May, AC sales are showing an improving trend. We can say the market grew by 3-5 per cent in the January-April period, against the expected market growth of 25-30 per cent,” Bajaj said. He added the company was still waiting for the weather to turn favourable. If summers are prolonged, the numbers would improve. Otherwise, the company would have to change its strategies.
To drive sales, most brands are emphasising on consumer promotions. These include offering finance at 0 per cent, free gifts and free installations (which could cost anything from Rs 500 to Rs 1,500) apart from the usual exchange offers.
Another competitor, Samsung, also hopes to see sales rise in May. A company spokesperson said, “Since peak sales were not recorded in April, we are more optimistic about May, as the heat is really picking up now. We have grown 20 per cent from January to April, compared to the last year. So, Samsung is offering a ‘triple zero’ financing scheme which means zero dealer buy down, zero processing fee and zero interest to buyers of both, ACs and refrigerators.”
Voltas said it hoped to register a 50 per cent rise in AC sales in May, compared with the industry’s trend of 30 per cent. Pradeep Bakshi, chief operating officer, unitary products business group, Voltas Ltd, said, “Our robust growth in May is due to a lot of changes that we implemented in our strategy last year.” Bakshi said the company focused on penetration in Tier-II and Tier-III towns. It had also improved its products and pushed for better placement in retail outlets. However, he admitted the industry had witnessed a bit of a delay in accelerated sales of air conditioners in the February-April period. “We expect summers to be a bit longish this time, since it started late. We are hopeful to make up for the losses in the coming months,” he said.
Godrej Appliances too, said while March fetched them a good growth, April was flat in terms of sales of cooling products. Kamal Nandi, executive vice-president (marketing and sales), Godrej appliances, said, “Due to low temperatures, high cooling products did not find enough consumption in April this year. However, we managed good growth in March because of our innovative products like ‘chotukool’ refrigerators.”
