Amid soaring temperature, demand for cooling products, particularly air conditioners has witnessed a sharp uptick and the industry has registered a cumulative record domestic sales of nearly 6 million units in the first half of this year.
The industry AC sales number zoomed even though makers took a price increase two to three times in the last six months, having a cumulative impact of nearly 10-15 per cent, as they faced unprecedented inflationary pressure from metals to key components and an increase in logistic charges such as ocean freight.
Voltas has sold close to 1.2 million units of residential ACs, while LG Electronic India has sold over one million units of residential inverter air-conditioners in the domestic market in the first half of this calendar year, said their respective statements.
However, some players are evaluating changes in their input costs as the Indian rupee is at a historic low against the US Dollar, which has increased component import costs and the recent revision by the government’s Bureau of Energy Efficiency (BEE) in the star rating of AC.
In the first half of 2022, other air conditioner manufacturers such as Hitachi, Daikin, Panasonic and Haier -also witnessed a similar upwards trend in their unit sales and expect an encouraging number for the remaining second half, though it contributes around 25 per cent of their sales.
The first half of this year was very good for the air conditioner industry, amid scorching heat this season without any lockdown restrictions, said Consumer Electronics and Appliances Manufacturers Association (CEAMA) President Eric Braganza.
“The January to June AC market (domestic) must be close to 6 million units. We never had such a high sales number in the past. I expect the second half to be in the region of around 2.5 million units and end this year with around 8.5 million units,” Braganza told PTI.
In 2019, when the market was not affected by the pandemic, the industry had sold nearly 4.25 to 4.5 million units in the first half.
Daikin India Chairman & MD K J Jawa said the company has sold around 4 lakh units in the April-June quarter and around 7 lakh units in the first half of 2022.
“We have grown over 30 per cent (in units) over 2019 (pre-pandemic) and over 175 per cent over last year,” he said.
Voltas has sold close to 1.2 million AC units in H1 CY 22, the highest ever by any player in the industry. This led to an increase in demand for cooling products given the intense summer experienced across the country coupled with the company’s strong online and offline distribution network and strongest brand equity, the Tata group firm said in a statement.
Similarly, LG Electronic India sold over one million units of residential inverter air-conditioners in the domestic market in the H1 period clocking a growth of nearly 50 per cent compared to last year, in which split models accounted for 90 per cent.
It has garnered Rs 4,000 crore revenues from the AC segment in the January-June period, said LG Electronics India VP, Home Appliances & Air Conditioner Deepak Bansal.
Makers such as Panasonic India also witnessed 35 per cent growth in the number of units sold in the first of 2022, in comparison to pre-pandemic 2019.
“Overall, we witnessed more than 35 per cent growth this summer (vs FY2019) for Air Conditioners; recording the highest ever sales in the month of March,” he said adding “consumers are also moving towards premium buys as we saw huge demand for inverter ACs, with maximum contribution coming from 4 stars and 5-star inverter ACs,” said Panasonic India Business Head, Air Conditioners Group Gaurav Sah.
According to Haier Appliances India, President Satish NS “We have achieved 70 per cent YoY growth in value; attaining a 60 per cent YoY growth in units sold in H1 ’22,” he said.
Besides, the makers also anticipate good sales of residential air conditioners during the July to December period, though it roughly contributes around 25 per cent of the industry sales.
“Though the peak season for the AC market remains the April – June quarter, we anticipate a good festive season for the industry that will further boost the consumer appliances sector,” Satish added.
Johnson Controls-Hitachi Air Conditioning India, which sells residential AC under the Hitachi brand, said it aims over 20 per cent growth in FY 22-23 (over 2019) in the Indian market and is optimistic about achieving record sales of approximately Rs 1,500 crore, said its Chairman and Managing Director Gurmeet Singh.
Now the Indian rupee is on the brink of Rs 80 per dollar, some makers are again evaluating the input cost changes for any further decisions on pricing as air-condition is still largely dependent on import (having a domestic value addition of 25 to 30 per cent only) “In line with the market and increasing commodity prices, we had to increase the price of our Air Conditioners twice this year, we are evaluating the input cost changes before we take any further decisions on pricing,” said Gaurav Sah.
According to Satish NS “with the recent revision in BEE ratings for the AC industry, the new SKUs are yet to reach the market and it would be critical to review the competitive cost and price trends.