Slowdown in the manufacturing industry in March and April continued in May and June with untimely rain taking a big toll on sales in North India. The fluctuating temperatures across the region has put brakes on the double-digit growth in summer of various consumer goods, including air-conditioners, soft drinks and ice-cream.
The AC market, which was expected to grow around 30% this summer, tanked 10% with the white goods manufacturers together selling 2.5 lakh to 3 lakh ACs less compared to the same period a year ago. Sales of ice cream, which bags a little less than 10% of the R1.4 lakh crore FMCG market, also remained 8-10% lower in several weeks between April-June period. So did sales of soft drinks, say experts. The R7,000-crore air-conditioner market, which corners around half of its annual sales during March-June period each year, has de-grown by 10% said Anand Ramanathan of KPMG advisory services. ?Certain categories within the consumer durables sector have seen a higher de-growth compared to the soft-drinks and ice creams. The AC segment has suffered the most,? he said.
K J Jawa, MD, Daikin India, said, ?The summer months are among the worst affected for ACs in past few years. The big players have all seen a decline in sales compared to the target of 25-30% aimed at the beginning of the year.?
But LG and Samsung India, South Korean durables firms, said their sales of ACs remained on track even though the industry numbers show otherwise.
The R8,000-crore soft drinks market, which generates over 40% of the sales during March-June period from North India, slowed down by 7-9% translating into a potential loss of R200 crore, allowing the fruit juice category to fill in.
The R1,300-crore branded ice creams market also witnessed a decline in sales by 8-10%, said industry sources. ?North India accounts for 52-55% of the branded ice cream sales and it saw a decline of 6-7% on a month-on-month basis. And this was the case with other dairy-based products too,? said a senior analyst representing a leading brokerage firm. According to analysts, high food inflation, hardening of interest rates and cooler summer have altogether impacted the overall consumer sentiments which is now being reflected in lesser spending.
The automobile sector has already witnessed to lower sales earlier this year. The passenger car sales slowdown drastically in March and April compared to the 30% highs in 2010-11. According to various estimates, this year (2011-12), the passenger car sales are likely to slow down to 8-10% or less than a third compared to previous year.
Commercial vehicle sales are likely to grow at a slow 8% in 2011-12, compared with 27% last fiscal year amid tightening liquidity, a likely slowdown in the economy and slackening road building and construction activity,” reported Edelweiss Securities.