With most parts of north-west and central India reeling under scorching temperatures, consumer durables companies expect record demand for refrigeration products like air conditioners and refrigerators this year, even as another round of price hikes looms amid rising commodity costs.
Major manufacturers are also expecting pent-up demand from the past two summer seasons, which saw severe market disruption due to the pandemic, and rising demand for air conditioning in Tier 2 and Tier 3 cities to help them grow by up to to reach 35% last year.
“As we all know, the pandemic has been very hard on business for both the industry and the brand. But as the pandemic began to get under control, things started to improve. This year, we are aiming for a growth rate of more than 20% compared to 2019, for both room air conditioners and commercial air conditioners…supported by various factors such as the ongoing trend of remote working, harsh summers and increasing consumer spending power,” says Gurmeet Singh, CMD, Johnson Controls-Hitachi Air Conditioning India, said.
Similarly, Deepak Bansal, vice president of home appliances and air conditioning at LG Electronics, India Peppystores that the last quarter was very promising for the company due to the good demand for air conditioners and refrigerators. “The industry is experiencing unprecedented demand for air conditioning due to the heatwave in India. For 2022, we expect growth of over 30% in the home appliance segment, supported by strong growth in cooling products in the first half of the year,” he said.
Mr. Bansal added that while the ongoing heatwave has definitely boosted demand for refrigeration products, their artificial intelligence smart home appliances are also in high demand. In 2021, the company enjoyed strong growth of more than 20% in the home appliances and air conditioner segment, reporting sales of ₹15,000 crore.
Manish Sharma, Chairman and CEO of Panasonic India & SA, said the company expects robust sales from all regions this year, mainly due to pent-up demand from last year. “We’ve seen record growth for air conditioning this March due to pent-up demand. We saw growth of almost 142% in the month of March 2022 compared to March 2019. We expect overall ACs to grow 30-35% year-on-year this summer,” he said.
Panasonic also saw 11% growth in refrigerators compared to fiscal 2019 and expects growth of 10-12% this year as well.
However, increased demand can also lead to a shortage of these products, as manufacturers are already faced with supply bottlenecks and the possibility of further price increases due to rising material and logistics costs.
“As demand grows, so does the pressure on the collective resources of the industry. The supply chain is feeling the strain worldwide. Added to this are rising costs for raw materials, transport and other inputs. Brands are constantly trying to circumvent these factors and provide consumers with the best possible solution,” said Mr Singh.
When asked if further price increases were likely, he said input costs are undoubtedly rising and brands are trying to rationalize costs as much as possible and develop cutting-edge technology that produces longer-lasting solutions. However, since the factors that constitute the cost are beyond the brand’s control, some costs need to be passed on to consumers.
Panasonic has already increased the prices of its air conditioners by around 6-8% in January 2022 and is “evaluating the changes in input costs before we make a decision on a further price increase”. LG Electronics is also “closely” monitoring the situation as the rise in raw material costs has been unprecedented.
Saurabh Baishakhia, President, Appliances, Usha International said the company is seeing a steady increase in demand for refrigeration equipment as summers have started earlier than expected and many regions in India are already experiencing very high temperatures. However, he added: “The chiller industry has been under pressure since last year due to the general increase in raw material costs, and prices have increased by 5-8%”.
