Demand for residential & commercial ACs dip by 10% and 20%: ASSOCHAM

assochamNew Delhi: Though the summer has started knocking door and the mercury level has moved up but air-conditioner manufactures have not yet received the benefit as the demand for residential and commercial ACs (air conditioners) are still down by 10% and 20% respectively in first four months (Jan- April), reveals the ASSOCHAM latest study.

The factors for down-swing have been attributed to rise in prices, slowed demand for consumer durable and high interest rates in air conditioners (AC) market, reveal the ASSOCHAM latest paper on “AC makers feel the heat this season- An Analysis”. In the past, the fastest growth had been witnessed from the new commercial as well as residential complexes. AC industry had been facing fall for the last three seasons and were expecting a pick-up this season.

While releasing the ASSOCHAM paper Mr. D S Rawat, Secretary General ASSOCHAM said, the first four months of this season have failed to show any significant uptick. Mr. Rawat further said, this year, the residential sales are dipped by 10% as compared to the last seasons. Similarly, the commercial sales are also down so far (15-20%) because the several projects are stuck and hence subdued demand, adds the paper.

As per the ASSOCHAM findings, the current domestic market size of AC industry estimated to be around Rs 7,500-8,000 crore. The prices of AC’s have increased due to the star rating regime, the market has seen de-growth of 15% in volume in first four months (January-April 2014) as compared to the same period last year, adds the ASSOCHAM paper.

On an average, the AC prices are also increased by 15-20% from January onwards, adds the ASSOCHAM paper. The consumers seem to be more focusing on energy efficient products that have valued proposition and also have a differentiated features. The input costs have increased by over 10-15% in the last four months.

It is creating a significant pressure on the profitability of the industry. Therefore, the additional burden on the consumer is anywhere compared with last season. The demand has been sluggish primarily due to the fact that majority of the players hiked rates by up to 20%.

Major companies are expecting a fall in sales this year, the leading consumer durable companies have already hiked prices of their products by almost 20 per cent since January. Other home appliance makers have also increased their prices by 20 per cent from this month onwards, reveals the ASSOCHAM paper.

The price hike has also hit sales in rural and semi-urban market, which account for about 35 per cent of total sales. The overall room AC market in India is estimated at 4.5 million units last year and is valued at Rs 7,500 – 8,000 crore. It is growing at over 30 per cent annually. Split ACs, at present, dominates the AC industry with more than 69 per cent of all units sold last year.

“There are several factors favouring the Indian air-conditioner market growth are changing lifestyles, rise in disposable incomes and ease of availability will aid this growth. Besides, most people are now using air-conditioned cars, working in air-conditioned environment and becoming conscious about hygiene and pure air, add the ASSOCHAM paper.

The paper further points out that star rates, energy efficient models with superior features will continue to rate high on consumer demand. Gaining from ongoing technological advances they have been transformed into products that can provide health benefits as well.

Author Description

OdishaInc Bureau