The coronavirus outbreak has triggered an immediate price hike of appliances.
Godrej Appliances on March 13 announced a 2-3 percent price hike in air conditioners (ACs) from March second half.
Kamal Nandi, Business Head and Executive Vice President – Godrej Appliances and President of Consumer Electronics and Appliances Manufacturers Association said that the short supply of components, increase in customs duty and higher logistical cost of air lifting components are key triggers for the price hike.
“The Coronavirus attack had a negative impact on consumer durables sector due to its dependency on imports from China, be it for finished goods or components. We have received reports that plants in China are operating at 50-60 percent capacity, but production has begun now. Prices for consumer durables especially in categories like ACs, televisions and refrigerators, are being revised by industry players,” he added.
For Indian appliance makers, China is a key source of components like air compressors for air conditioners and air coolers, as well as LED panels for televisions.
Moneycontrol had reported earlier that COVID-19 outbreak would lead to a hike in electronic goods prices. China is the epicentre of Coronavirus outbreak with the first case being detected in Wuhan in December 2019. Immediately post that, there was a production shutdown across China due to multiple cases being reported.
Nandi explained that while as of now the finished goods are available, the industry will be in the red zone if things don’t improve by April.
From March 15 onwards, industry sources said that products like TVs, ACs and refrigerators will get expensive by 4-5 percent on an average.
Given the high seasonality of cooling categories like ACs and refrigerators, Nandi said that the shortage of stocks is bound to hit revenue for summer.
China, the epicentre of the outbreak, is a major exporter accounting for almost 23 percent of global electronic goods. Among products, mobile phone supplies saw the steepest impact as manufacturers were left with stock for only a few months.
Importing a finished product turns out to be costlier since there is a 20 percent import duty on completely built units. With imports also ruled out, a price increase on the available stock is the only option at the moment.