Days of robust growth seem to have returned to the consumer durables market, after a gap of two years, helped by rising disposable income, easy finances and growing popularity of e-commerce platforms.
As they look forward to even better days in 2016, almost all leading appliance makers including Panasonic, Sony, LG, Samsung, Videocon, Haier have ramped up production capacity.
Joining the Make in India bandwagon, they also increased the local sourcing amid a slew of new product launches in 2015 and the trend is expected to further firm up in the new year.
According to the Consumer Electronics and Appliances Manufacturers Association (CEAMA), the industry overall saw a good uptick in demand in 2015 and witnessed a growth of almost 25 per cent during the festive periods.
"The Consumer durable industry has been on a high-growth trajectory throughout the year aided by the government support and emergence of innovative technological solutions. While certain challenges like a below-normal monsoon and the consequent dip in sentiment in rural markets did act as a dampener and hit the sales of consumer durables industry, there was an overall uptick in the market sentiments," CEAMA President Manish Sharma said.
According to the government data, the Index of Industrial Production (IIP) for consumer durables grew by 11.8 per cent between April-October this year, as against a contraction of 16 per cent in the same period of last year.
Industry experts believe that the surge in online sales has also contributed considerably to the growth as the products were delivered at consumer's doorstep while discounts and easy finance options on e-commerce platforms gave a further push.
"The consumer durables segment has seen a revival in demand in 2015. This has been primarily due to the increase in sales by the online/ecommerce companies and macro-economic factors like interest rate-cuts in the latter half of the year," KPMG India's Rajat Wahi said.
"The e-commerce channel sales were seen to have had a big impact on the growth of the consumer durables and home appliances segment them to expand their distribution and reach through aggressive discounts and promotions being offered by the ecommerce companies.
"TVs have seen the most benefit in this segment due to the large volumes sold through the online channels," he added.
In 2015, companies like Videocon and Haier announced big investments to expand their manufacturing capacities, while Sony started manufacturing its Bravia range of TV panels after more than a decade.
"In 2015, Haier announced its major investment plan of Rs 470 crore towards the expansion of the Pune manufacturing facility, endorsing the Central government's Make-in-India initiative.
"The new facility would go on stream in 2017 and will not only double our production capacity for refrigerators but also commence manufacturing of other categories like, washing machines, air conditioners, LED panels, water heaters and deep freezers," Haier India President Eric Braganza said.
"Videocon has earmarked Rs 1,000 crore for opening new manufacturing facilities as well as upgrading the existing facilities over the span of three year," Videocon Director Anirudh Dhoot said.
Sony has entered into agreement to manufacture its Bravia line of televisions at Taiwanese contract manufacturer major Foxconn's plant near Chennai.
"With Bravia television being locally manufactured in India from this year, we expect sales to accelerate over the next few years," Sony India Head Sales Satish Padmanabhan said.
South Korean maker Samsung, which has completed its 20 years in India, also continued to invest more to boost its manufacturing capacity at its Noida and Chennai units.
"Samsung made investments in production and research and development at our factories in Noida and Chennai and in our R&D Center in Bangalore and Noida. This includes expansion at the Noida mobile phone facility. All these points to our commitment to India, and our firm belief that India is the future," a Samsung spokesperson said.
This year, a number of companies also expanded their product portfolios here while many forayed into the air purifier market as well.
"The year 2015 has been defined by certain innovative technology trends in the consumer durables industry. Today we have machines that are intuitive and learn and act accordingly with very little or no human contact," LG India's Head of Corporate Marketing Niladri Datta said.
During the festive period such as Diwali, which is also considered auspicious time for buying new products, the durable makers witnessed 25 per cent growth in volume.
"Factors like rising disposable income and urbanization of consumers, and easy finance options lead the industry recording a growth of 25 per cent during festive season and with positive impact on demands for flat TVs (14.5 mn units), refrigerators (10.12 mn), washing machines (4.86 mn)and ACs (3.86 mn)," said CEAMA's Sharma, who is also Managing Director Panasonic India & South Asia.
However, some concerns also emerged for the the sector in 2015.
EY India Partner and National Leader - Retail and Consumer Products, Pinakiranjan Mishra said, "It has not been any special or great in general. Obviously, there is a growth but had then been able to access the global market, the situation would have been far far better and I think that there is an opportunity to do so because make-in-India as China is getting more expensive now."
In 2015, durables makers also faced a decline in rural sales due to monsoon deficit.
"We saw growth across consumer segments and this was partly because of the growing base and needs of the middle class buyers. The surge in aspirations of youth in small towns and tier-II cities, who clearly understand their gadget needs, have led to a greater number upgrading the technology products, be it smartphones, televisions and home appliances, among others," the Samsung India spokesperson said.
The companies are betting on further rise in growth rates in 2016.
"Buoyed by the current progress, the industry will continue to grow, aided by the policy changes made by the Government of India. The product categories which will see a major fillip in 2016 are high-end Television, Air conditioners and Smartphones," CEAMA's Sharma said.