The first quarter has been a mixed experience for AC manufacturers. Unusual rainfall in certain areas, particularly the northern region, has affected the demand for residential AC units. Consequently, the industry is projected to experience a decline in the June quarter compared with the previous year. However, manufacturers have reported some growth thanks to the demand for high-end products.
Kamal Nandi, Business Head and Executive Vice President – Godrej Appliances, said the industry will end the June quarter at a degrowth of about 20-25 per cent compared with the same period last year. “April and May were hit due to unseasonal rains especially in the North. June sales trends are relatively better. While demand for the entry level segment was tepid, there has been good demand for premium products. Despite challenges, as a company we have garnered good growth but we would have done better,” he added.
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February witnessed an unprecedented surge in demand for cooling products. However, in April and May, lower-than-anticipated temperatures occured due to unseasonal rains, especially in the North, which accounts for 40 per cent of total AC sales.
Satish NS, President, Haier Appliances India, said, “The traditional strong markets such as Delhi-NCR, Punjab, Rajasthan and Maharashtra did not do well in terms of AC sales. But non-traditional markets such as West Bengal, Odisha, Bihar, eastern Uttar Pradesh and even southern regions such as Andhra Pradesh and Tamil Nadu reported a surge in demand for air-conditioners. It was challenging and the brands that were able to make quick decisions to serve these markets have done well.”
Industry optimistic
Despite the degrowth seen in the first quarter, players are hopeful that the air-conditioner sector will end the year on a positive growth trajectory.
“Temporarily it may look like sales are down in the residential AC segments due to unseasonal rains. However, I believe this is for the short-term. There are expectations of a longer summer season and air-conditioners have become more like lifestyle products. Offices, malls, commercial buildings, and schools are getting air-conditioned and there is a strong demand due to infrastructure development,” said Kanwaljeet Jawa, Chairman and MD, Daikin India.
B Thiagarajan, Managing Director, Blue Star Ltd, added, “This time the summer season did not not see the usual impulse purchase trends for air-conditioners. While some markets did extremely well, other markets did not fare well. So, the industry is expected to see lower-than-anticipated growth levels or remain flat in the first quarter. However, the industry is expected to end the year on a positive trajectory on the back of factors such as lower penetration levels, demand generated due to infrastructure and residential projects development.”