If the recent decline in inflation has got your hopes high, you may be in for a rude shock. Prices of white goods are not coming down anytime soon. In fact, the opposite is likely to happen. White goods makers, which have been steadily increasing their prices over the past two years, are likely to do so this year as well. Prices of consumer durables from ACs and refrigerators to smart TVs and washing machines are likely to go up. A further rise is expected in the second half of FY24 as the prospect of a normal monsoon is less assured.
Since late 2020, when the inflation cycle started, prices of large-ticket consumer appliances like ACs “have increased by more than 30 per cent”, says Kamal Nandi, Business Head and Executive Vice President at Godrej Appliances. “The costs had peaked in mid-2022 and since then we have observed some easing in the component prices. However, it is difficult to predict beyond the next three months because the situation remains uncertain.”
Another wave of price hikes is on the horizon, says Avneet Singh Marwah, CEO of Super Plastronics that makes and sells smart TVs under the Thomson and Kodak brands. “In the past four months, the prices of [LED] panels have surged by a whopping 30-35 per cent. We are planning to increase prices of TVs by 7-10 per cent from June,” he says.
However, AC company Blue Star is not in a mood to raise prices. It expects a harsh summer this year—as forecast by the IMD—to result in more sales. This is important as home appliance firms, including AC makers, have suffered heavily in the last three summers due to Covid-19. In 2021, AC sales fell 10–12 per cent. While the market rebounded to 9 million units a year in 2022 from 8 million in 2019, companies remain cautious as rising prices may deter purchasers. ACs and mass-market refrigerators were also affected by poor rural market demand and intermittent rains over April and May. Nandi says demand for high-end frost-free refrigerators is consistent, but mass-segment direct cool models—that make up 70 per cent of the Indian market by volume—are suffering. AC makers still struggle with low demand. Due to unseasonal rains, Whirlpool’s net profit dropped 25 per cent, YoY, in the March quarter. Based on new mid-premium launches and “accelerated cost reduction programmes,” Narasimhan Eswar, MD of Whirlpool Of India, expects profitability to rise.
“We hope the situation improves gradually and we are not increasing prices as of now,” says B. Thiagarajan, MD of Blue Star. But, not everyone is on the same page. While players like Havells, Samsung, and LG are not ready to reveal their pricing plans for the next six months, sources say prices of home appliances will rise by 6-12 per cent before the festive season begins. Looks like another cruel summer for consumers.
@arndutt
