Heatwave Brings Respite For AC Makers

Air conditioner sales in India grew 20% in both April and May from the year earlier as a prolonged winter followed by a surge in summer temperatures is fuelling a market recovery after two straight years of tepid sales.

Sales were especially strong in parts of south and east India, according to air conditioner makers.

If the sales momentum continues, 2019 could turn out to be one of the best years for cooling products after 2016, which saw harsh summers.

Large parts of India are in the grip of a heatwave. Temperatures began rising in April and soared in May with Churu in Rajasthan crossing the 50° Celsius-mark earlier this week. In Punjab, Haryana, and Delhi-NCR, a red alert has been issued advising residents to stay indoors as the mercury stayed above the 40°-mark.

Earlier this month, the India Meteorological Department maintained that an intense heat wave will continue to hold strong in northwest, central, and peninsular India over the next few days.

The summer of 2019 can be related with the summer of 2016 in terms of high intensity and high offtake, said Pradeep Bakshi, managing director and chief executive officer (CEO), Voltas Ltd. The last two years have been relatively slow for the AC industry, he said.

This, he said, “is being reflected in the higher consumer demand for the industry’s products this year, with the industry expected to grow at high double digits”.

A strong uptake in AC sales was visible in parts of south and central India, which saw the highest traction starting in March. From the second half of May, sales in north India also started peaking and this is expected to continue till the end of June.

India’s AC market is at 6 million units annually, according to data from Consumer Electronics and Appliances Manufacturers Association or Ceama.

“Elongated winters have pushed AC demand to Q1 FY20, wherein dealers anticipate higher growth in the range of 20% to 25% year-on-year on a low base,” brokerage Edelweiss said in an April report.

The local arm of Japan’s Panasonic too said sales rose 25% in April from a year earlier, and sales for May held strong.

“March-April-May has been fantastic for the industry. We did about 25% in April; May is going well as well. The majority of manufacturers have enjoyed such a summer sale after a gap of nearly three years,” said Manish Sharma, CEO, Panasonic India and South Asia.

A rebound in AC sales comes as durables companies grapple with sluggish sales, higher input costs and intense competition.

South Korea’s LG posted more than 40% rise in both April and May, said Kulbhushan Bhardwaj, head, air conditioners, at LG Electronics India. LG, which largely sells inverter air conditioners, raised AC prices by 2%-3% earlier this year. It, however, offered EMIs and exchange offers.

Sales this year have been “beyond expectations” for its cooling products, said an official of Usha International.

“All our coolers have been sold out and this is across all forms and factors. Unprecedented sales such as this happen only once every few years,” said Sandeep Tewari, president, marketing, Usha.

The company that sells fans and air coolers said it ran promotional campaigns during the general elections and the Indian Premier League.―Livemint

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