Air conditioner makers are raising prices again, with Voltas increasing AC prices by about 2-3% in July—an unusual move during the monsoon-led off-season, when manufacturers typically avoid price revisions. The move underscores how persistent input cost inflation and currency pressures are outweighing seasonal demand concerns.
Dealer conversations suggest Voltas may not remain an exception. Consumer electronics retailers say several brands are preparing similar revisions as manufacturers continue to grapple with elevated input costs. Industry executives and analysts estimate that AC prices could rise by another 3-4% over the coming weeks.
“We are expecting price hikes to kick in. Brands are giving us indications of the same across appliances, including ACs,” said Nilesh Gupta, director at electronics retailer Vijay Sales.
Rising Input Costs
The latest increase comes after air conditioner manufacturers implemented two rounds of price hikes between January and April, cumulatively raising prices by around 10-12%. Despite these revisions, companies say higher commodity prices and a weaker rupee continue to squeeze margins.
“Higher input costs continue to pressure margins despite earlier price increases. Given the competitive nature of the market, manufacturers have not been able to fully pass on these costs,” said B. Thiagarajan, managing director, Blue Star.
Among the biggest cost pressures are copper and aluminium, key raw materials used in air conditioner manufacturing. Prices of both metals have remained volatile in recent months amid geopolitical uncertainty and tight global supplies. Although plastic prices have eased by about 7-8% from the highs seen during the Iran conflict earlier this year, the decline has not been enough to offset higher metal costs and currency-related pressures.
Mixed Bag for Manufacturers
The industry’s confidence in pushing through another round of price increases has also been aided by an extended summer season. Erratic weather patterns in several parts of the country prolonged cooling demand beyond the usual peak months, giving manufacturers greater room to implement price hikes.
Brokerage HDFC Securities said the extended cooling season has provided manufacturers with greater confidence to raise prices without materially affecting demand.
Demand trends, however, remain mixed. Kamal Nandi, business head and executive vice-president, appliances business at Godrej Enterprises Group, said that while refrigerators and washing machines continue to see healthy demand, air conditioner sales have plateaued with the onset of the monsoon.
The industry now faces the twin challenge of protecting margins while sustaining demand. Manufacturers are reluctant to absorb further cost increases as commodity prices remain volatile and the rupee stays under pressure, even as repeated price hikes risk tempering demand in a category that has already seen double-digit inflation this year. Dealers expect more brands to announce fresh price revisions over the coming weeks if input cost pressures persist.
