As temperatures soar across India, durable goods companies are reveling in the early arrival of summer. With daily highs reaching 34-35 degrees Celsius in the east, west, and parts of the north, consumers are flocking to purchase air conditioners, coolers, and fans. This surge in demand is expected to boost sales by 35-40% year-on-year, a promising outlook for manufacturers in the sector.
Anticipated Sales Growth in Air Conditioning
Last summer, air conditioning units enjoyed a 35-40% increase in sales, while refrigerators also saw a respectable growth of 12-15% during the warmer months. According to Kamal Nandi, the business head and executive vice-president of Godrej Appliances, this year is poised to mirror last year’s impressive results. The recent heat wave is setting the stage for a similar growth trajectory in the upcoming months.
Weather Patterns and Consumer Demand
The Indian Meteorological Department (IMD) has predicted rainfall around March 14 (Holi) for regions including Delhi and northern India. However, experts warn that temperatures are likely to rise again after the festival. The north accounts for 38% of air conditioner sales, while the west, south, and east contribute 23%, 22%, and 17%, respectively.
The demand for air conditioners last year peaked late, with significant interest only emerging by the end of April. However, Ajay Singhania, MD & CEO of Epack Durable, an AC manufacturer, reports that this year’s demand is already gaining momentum. He anticipates that sales could reach 18 million units, up from last year’s 14-15 million.
Supply Chain Challenges and Manufacturing Adjustments
Unlike the previous year, when supply constraints hampered production, this season is expected to be different. Still, Singhania cautions that there could be shortages in components like compressors and copper tubes due to quality control issues. The Bureau of Indian Standards is currently recertifying factories abroad that supply these critical parts, which may hinder production during the peak summer months of May and June.
Typically, 40-50% of an air conditioner’s components are imported from countries like China. Manufacturers began sourcing these parts after Diwali to avoid shortages during the crucial early summer months.
Strategic Preparedness for Increased Demand
NS Satish, president of Haier Appliances India, emphasizes that the industry is better prepared this year in terms of inventory to prevent supply disruptions. He predicts that sales growth will primarily come from premium products, although there will also be an uptick in mass-market items due to recent income tax cuts announced in the national budget.
Innovative Offers to Attract Consumers
Promotional deals, financing options, and warranties are expected to play a significant role in increasing sales this season. Notably, both Godrej and Haier are introducing five-year comprehensive warranties for their air conditioners, priced at around Rs 7,000-8,000. This initiative aims to enhance consumer confidence by covering technical issues with no hidden fees after purchase.
Enhanced Distribution Strategies
Voltas is ramping up its distribution efforts, both online and offline, to ensure easy access to products for consumers during the hot months.
Pradeep Bakshi, MD & CEO of Voltas, stated, "We are expanding our reach through new brand store openings and providing easy financing options to streamline the purchasing process for our customers. Our innovation pipeline is also focused on introducing new products and variations that meet the evolving needs of consumers."
As summer heats up, the durable goods market is prepared to meet the rising demand, ensuring that consumers have the cooling solutions they need to stay comfortable.
