Home air conditioner prices could rise about 5% as the industry faces soaring input costs, even as manufacturers seek double-digit growth this year with the early start of summer boosting demand. demand.
Buoyed by the Indian Meteorological Department’s (IMD) recent prediction that summer temperature is expected to remain “above normal” in April and May, major air conditioner manufacturers including Voltas, Hitachi, LG, Panasonic and Godrej Appliances, expect pent-up demand from the past two seasons which has seen market disruptions due to the COVID-19 pandemic.
Some of them expect increased demand this season, which could also lead to a shortage of units, putting them under pressure to meet increased needs for air conditioners and other cooling products. The industry opted for higher prices in the last quarter to mitigate the impact of soaring prices for components, metals, especially copper and aluminum, and rising crude oil after the Russian conflict. -Ukrainian. Companies are also enticing customers with simple EMI offers and programs to make shopping easier.
Tata Group company Voltas expects the residential air conditioning industry to grow in terms of volume and value this summer. “The industry has already been subject to multiple double-digit price increases in fiscal year 202122. However, at Voltas, given our consumer-centric philosophy, we have ensured that these increases do not deter not consumers to purchase cooling products this summer, and therefore have introduced various consumer offers and easy EMI options to make shopping convenient for our customers,” Pradeep Bakshi, Managing Director and CEO of Voltas, told PTI .
The Consumer Electronics and Appliances Manufacturers Association (CEAMA) expects this peak season to account for 35-40% of total annual sales. However, he also warns of a price hike. “Prices have been erratic over the past few years, and the pandemic has made the situation worse. Over the past 18 months, the appliance/durable appliance sector has seen prices increase by up to 15%. The industry is under constant shock pressure due to a surge in commodity inflation and the cost of raw materials.
“Nevertheless, the price increase will not have an immediate impact on consumers because the production of stocks is already planned until March-April 2022. A further price increase can be expected from May in due to rising prices of raw materials, crude oil, cost of freight etc,” CEAMA Chairman Eric Braganza told Johnson Controls-Hitachi Air Conditioning India, which sells residential air conditioners under the Hitachi brand. , said the work-from-home culture is driving the industry’s growth, while pent-up demand could also lead to a shortage of air conditioners this season.
One of the biggest challenges for manufacturers is to keep raising prices without affecting this huge consumer demand, said Gurmeet Singh, president and managing director of Johnson Controls-Hitachi Air Conditioning India. “At Johnson Controls-Hitachi Air Conditioning India Ltd, so far, we are doing our best to absorb the pressure from varied market conditions and adverse global circumstances to provide relief to consumers regarding pricing. However, the way things are progressing on commodities and other fronts, we need to raise prices another 3-4% by April,” he said.
For example, a 3-star inverter split air conditioner which sold for Rs 33,500 until last year has reached Rs 36,5000 at Rs 37,000.” The promotions, which were offered with the ACs until last year , have also been reduced to a much lower level this year. This is directly related to the affordability of manufacturers this year,” Singh said.
During the price hike, Godrej Appliances CEO and Executive Vice President Kamal Nandi said his company would wait and monitor the situation. “With the past two summers impacted by lockdown and many consumers postponing purchases until now, rising summer temperatures and the hybrid working model adopted by many businesses should support demand even amid the increase. prices,” he said.
Gaurav Sah, Panasonic India’s sales manager for the air conditioner group, said there is huge demand for energy-saving inverters and the company expects robust sales across all regions. “Meanwhile, we hope to see double-digit growth in the AC industry this summer,” he said.
However, Sah also added, “In accordance with the market and the increase in raw material prices, we had to increase the price of our air conditioners by around 6-8%. We carefully evaluate input cost changes before deciding on a further price increase. .” According to Nandi, India’s heating, ventilation and air conditioning (HVAC) industry is valued at Rs 18,00020,000 crore. “Air conditioner is one of the least penetrated product categories in India with only 5 % penetration. With harsh summers and a need for comfort in every home/non-residential unit, air conditioning has become a necessity. Consumers will increasingly look for solutions to beat the oppressive humidity brought on by the monsoon as well,” he said.
Deepak Bansal, LG Electronics India Vice President, Home Appliances and Air Conditioners, said with rising temperatures, he foresees good traction in the air conditioner sector and expects this demand to increase in the second quarter. of this calendar year. “This robust growth is driven by a strong product portfolio based on Indian ideas with sleek design and smart functionality, which focuses on comfort, health, energy efficiency and core performance of products based on on consumer technology leadership,” he said.
According to the President of CEAMA Braganza, the Indian residential air conditioning market is expected to be around 7-7.5 million units with more than 15 companies operating in the space. The segment is still heavily dependent on imports with an average of only 25 percent local value added. Last year, the government had approved 26 applications to manufacture air conditioner components with a committed investment of Rs 3,898 crore under the production-linked incentive scheme.