Buying a new television set, air conditioner, refrigerator, or any other home appliance is set to get costlier by 3-4 percent more from July. This comes as home appliance makers are hiking prices once again to offset rising input costs.
Home appliance retailers and industry sources said that commodity prices rose 18-20 percent in the past six months, especially that of steel, copper, and aluminum that goes into making these appliances. While appliance makers have hiked prices by about 12 percent in the first six months of 2021, there is a gap of 7-8 percent left.
Kamal Nandi, the president of Consumer Electronics and Appliances Manufacturers Association (CEAMA) and Business Head of Godrej Appliances, said that various brands are taking price hikes in a phased manner and that the remaining gap of 7-8 percent could be taken in two or three tranches.
On the same lines, Godrej Appliances is likely to hike prices in 2-3 tranches in the July-September quarter as demand returns.
Bajaj Electricals is also mulling hiking prices of a minimum of 3 percent from as early as July.
“The price hike will be across the board because prices of plastic, crude oil, metals are rising, and in fans, copper is the key component. LED panels and semiconductors are also in short supply so all categories are impacted,” Anuj Poddar, executive director of Bajaj Electricals told CNBC-TV18.
Neeraj Bahl, MD & CEO of premium home appliance maker Bosch & Siemens Home Appliances, which hiked prices by 3-4 percent in the past six months, says that on the back of input cost pressures of approximately 18-20 percent, the company is passing 3-4 percent price hike to customers from June 15.
Blue Star, the maker of Air conditioners, says prices of ACs would be costlier by 25 percent by September as compared to last year. This is after the company took two rounds of price hikes – 5-8 percent in January and 3-5 percent in April 2021. However, due to restrictions amid the second wave, the April price hike will only come into effect now as restrictions ease and stores open up.
However, the steepest price hike has been in digital products, especially in televisions, thanks to the acute global shortage of LED panels and semiconductors. As per industry sources, prices of smart TV sets have increased by around 30-60 percent, while prices of some 50-inch UHD smart televisions increasing by 60 percent this year, as compared to last year.
Sony, sources say, is hiking prices by 12-15 percent. However, Sony has not yet responded to CNBC-TV18 seeking confirmation on the same.
However, B Thiagarajan, MD of Blue Star, says that this could impact demand. “The next price increase will be a real test for the demand picture because is the initial rounds of price hikes, customers downgraded from say a 5-star AC to a 3-star AC. The next price increase will mean even that downgraded product will become unaffordable to the customer,” he says.
While the first three months of 2021 were good for appliance makers, the peak season, especially April and May turned out to be washout amid restrictions in various states.
According to CEAMA’s Nandi, April brings in 12 percent of annual sales for appliance makers, and of this, the industry lost about 5-6 percent this year as restriction started kicking in. With most of the country being under a lockdown in May, Nandi says that the industry lost the entire 15 percent of annual sales that the month of May contributes.
Compared with last year, he adds, that sales were lower by about 20 percent in the April-May period. “Last year while everything was shut in April, restrictions started easing in the second half of May, but here entire May was closed, while in April too, restrictions started getting imposed from the second week. So while its technically similar compared to last year, the impact this year is higher,” he adds.
And in the first quarter (April-June), which contributes 36 percent to annual sales of home appliances, the industry lost 24 percent.
Industry players say that with no respite on input costs yet, hopes are now pinned on the easing of restrictions that could bring back some demand and prop up sales despite higher prices. CNBC TV18