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Why are people buying more ACs despite prices rising more than 10%? Is it only because of the heat?

Why are people buying more ACs despite prices rising more than 10%? Is it only because of the heat?

Despite prices rising by around 10 per cent, AC sales have spiked this summer

With the extreme heat waves witnessed across the country during the summer months, demand for air conditioners (AC) has spiked in the domestic market. With the extreme heat waves witnessed across the country during the summer months, demand for air conditioners (AC) has spiked in the domestic market.

With the extreme heat waves witnessed across the country during the summer months, demand for air conditioners (AC) has spiked in the domestic market. Unlike 2019 and 2021,when the annual domestic sales of ACs was recorded at 7 and 6.4 million units, respectively, the industry has already sold 6 million units in the first half of 2022 (January-June). Only 4.25 million units were sold in the corresponding period in 2019, industry numbers show. “AC sales this year have been better than the last two years, especially in the first half. We never had such high numbers in the past,” says Eric Braganza, President, Consumer Electronics and Appliances Manufacturers Association (CEAMA).

But the heat wave alone hasn’t contributed to the spiking sales. Industry players have observed a pent-up demand owing to the past two summers being affected by the pandemic-induced lockdowns. “Even the discretionary spending from other categories was being diverted to cooling solutions such as air conditioners,” says Sabyasachi Gupta, Product Group Head of Air Conditioners at Godrej Appliances.

But with the onset of monsoon and temperatures cooling down towards the second half of the year, the months of July, August and September see the weakest sales numbers for the category every year. Going forward, demand will be driven by replacement needs, home renovation and the need for products with advanced features. To capture the anticipated demand and encourage end users, companies are also planning to launch attractive offers for consumers during the upcoming festive season. Industry body CEAMA expects another 2.5 to 3 million units to be sold before the end of this year. Industry estimates AC sales to be around 8.5-9 million units by the end of this year.

RECOUPING LOST SALES

As AC sales contribute significantly to the consumer durables pie, the market size of ACs alone is likely to help the consumer electronics segment recoup the lost sales of 2020 to a great extent. For instance, Panasonic Life Solutions India has observed a record demand for ACs, with the company registering sales growth of more than 45 per cent during January-July 2022. And the maximum contribution has come from 4- and 5-star rated inverter ACs. “This has helped us move closer to recovery. And we are hopeful that consumers will continue to purchase during this festive season, which will further contribute to overall sales,” says Gaurav Sah, Business Head of Air Conditioners Group at Panasonic Life Solutions India.

Also, ACs contribute around 25 per cent to the overall consumer durables sales. And owing to the rising input and component costs, their prices have gone up by around 8-10 per cent in a phased manner since January this year. Despite that, it looks like AC manufacturers will have a cool year this time around.

 

@nidhisingal