AC cos take promotional route to clear inventories

Written by Yogima Seth | New Delhi, Jul 29 | Updated: Jul 31 2008, 06:05am hrs
In an effort to clear the huge inventory of air conditioners, which has been build due to early arrival of monsoons, major consumer durable companies are now coming up with offerslike free installation, extended warranty and purchase on an initial payment of just Re 1 to lure customers to advance the purchase of air conditioners.

"With another 1% hike in prices of air conditioners from August, customers who are planning to buy ACs during the festive season will end up shelling out 7-10% more than the prices prevalent few months back," said Rajiv Jain, group head for ACs, LG Electronics, adding that the company has come out with offers that are expected to help prospective buyers advance their purchase decision.

"The company is giving free installation, which costs Rs 500 in case of window ACs and Rs 1,200-Rs 1,500 in case of split ACs, and extended warranty on purchase of AC during this time," he said.

According to Pranay Dhabhai, director, Haier India, "While pre-monsoon had impacted the impulse buying decision of AC buyers, the cumulative price increase of 4-5% in May and June had a marginal impact on the total sales. However, the demand has picked up in the last week or 10 days with companies giving good offers on air conditioners that has some influence on the purchase decision."

As part of it ongoing promotional schemes, Haier India has an exchange offer on ACs as well as benefits of purchase on installments. Samsung India has gone a step ahead and is offering air conditioners on a down payment of just Re 1 with the balance amount being paid in six installments.

"Major consumer durable companies maintain one month sale, which means 10,000-12,000 units a month, as inventory. However, the heavy showers in May and June resulted in double the normal inventory or over 20,000 air conditioners. As a result, the companies are coming up with offers to clear the stock," said an industry expert.