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Moving Toward Larger Capacities

Moving Toward Larger Capacities

The washing machines industry at a 12.4 percent CAGR over the last 5 years is now giving better realization as consumer preference is moving toward larger capacity and premium models.

The washing machines market size in India is estimated at 6.5 million units with the second-lowest penetration among household appliances at 11 percent. There has been a perceptible increase in the industry in value terms, as the consumer over the year has shown a distinct shift in preference for the larger models, in both categories, semi-automatic and fully automatic, across urban and rural areas. The market is estimated at Rs. 9571 crore, with fully automatic machines dominating at 62.6 percent. Within the fully automatic segment, the top loaders reign with a 63.43 percent revenue share.

LG continues to dominate the market with a 37 percent share, by volume. Samsung, Whirlpool, and Godrej have an aggressive presence. IFB has presence only in fully automatic models. Videocon continues to lose market share, gainers being the regional, relatively smaller brands.

Moving forward, LG plans to focus on growing these categories further, given that there is very low penetration and huge potential by introducing models with new energy- and water-saving technologies. Samsung is heading toward being IoT-ready and will soon launch machines featuring the Bixby AI interface. For Whirlpool India, washing machine is the second largest contributor, accounting for 20 percent of the company’s revenue. Godrej has strengthened its manufacturing capacity of washing machines at its plant in Mohali from 4 lakh to 6 lakh units per annum, and is targeting 25 percent growth in the category. Washing machine is the largest product category of IFB, contributing 65 percent to total home appliances’ revenues in FY17. With an industry leadership in front-load washing machines, the brand is enhancing top-load washing machine portfolio, with the launch of a mass market 6 kg variant.

This year, Daiwa has forayed with semi-automatic models in the Punjab market and is steadily expanding its network. With the concept of a double drum technology washing machine, Haier is establishing a step ahead toward understanding diverse needs of discerning customers. Truvison has strengthened its product portfolio with semi-automatic machines powered by the PowerSkrub technology. Daenyx is looking forward to maintaining its position in producing a wide range of fully automatic and semi-automatic washing machines starting from 6 kg to 10 kg capacity. Akai aims to acquire a substantial pie in the market with its range of semi-automatic and fully automatic washing machines ranging between 6.5 kg and 8.5 kg. GEM has set up a new manufacturing line for its Triomatic washing stations and has enhanced its production capacity from 0.75 million to 1.25 million units at its Baddi plant, Himachal Pradesh, with further plans to install a new plant in Baroda, Gujarat with a capacity of 1 million washing machines starting September 2018. Wybor has established a fully integrated manufacturing facility in Greater Noida with an installed capacity to produce 600,000 washing machines per annum. The brand is planning presence in the western and southern markets of India. Vestar, with its strong product lineup of semi- and fully automatic models ranging from 6 kg to 8.5 kg is focusing on superior technologies including inverter, single touch, and one-key thermal sterilization. Panasonic India aims a double-digit growth in the washing machines category by FY21. Onida has targeted to grow in this category by 80 percent during the current year generating revenue of Rs. 1.6 crore and is targeting rural markets with semi-automatic washing machines and washers.

In terms of capacity, the 6 kg washing machine is almost non-existent. And the 7 kg and above capacity machines are seeing maximum traction.

Driven by the rise in household income, rising urbanization, increased number of nuclear families, rising manpower costs (domestic help) in urban areas, rising trend of working women, and availability of consumer finance, the trend is expected to continue over the next few years. Further, replacement demand also provides incremental avenues to tap existing customers as the average life of a washing machine is 7-8 years.

Front-load washing machines provide a better wash quality similar to a laundry wash because of tumble motion, higher revolutions per minute (which increases cleaning efficiency), and the in-built water heater which facilitates better stain removal. Front-load has a higher wash cycle time of 90 minutes versus 45 minutes for top-load. It has a higher drying capacity at 75–80 percent versus top-load which offers drying capacity of 50–60 percent. These washing machines use less water (~50–60 liter per wash cycle vs. ~120 liter for top-load) and have lower power consumption and better voltage management system. Hence, the product premiumization trend favors front-load washing machines. However, the top loading machines continue to have a higher share as the price difference between the two is substantial.

The use of home laundry appliances was mainly limited to urban India, but with increasing disposable incomes amongst rural consumers, government initiatives for rural electrification, and rising consumer awareness of the utility of washing machines, the demand for home laundry appliances in rural India is rising. Rural consumers will be the drivers of primary sales of home laundry appliances in India over the coming years. The Indian government’s initiatives to increase local production will lower the cost of products and increase demand. With rising disposable incomes and innovation, the demand for home laundry appliances is increasing.

Convenience to the consumer is a key factor fueling demand for washing machines. One of the trends seen in the washing machines market in recent times is the use of technology that reduces the use of water for washing. The growing scarcity of water worldwide and the realization that water is a limited natural resource have compelled manufacturers to devise a technology that minimizes the use of water. Smart washing machines have also gained traction in recent times on account of the increasing penetration of Internet of Things (IoT) and smartphones. Ability to operate remotely, control functions of the washing machine by using smartphones, and receipt of notifications are expected to increase popularity of these machines.

Global scenario

The global washing machines market is prognosticated to rake in ample amount of demand from the residential sector as consumers reveal a major inclination toward smart and connected products. Vendors in the market are taking to products which can be managed and controlled with a few touches on the consumer’s smartphone.

Residential washing machines. The global residential washing machines market is projected to reach USD 53,193 million by 2023, growing at a CAGR of 5.5 percent from 2017 to 2023. Increase in disposable income and improvements in rural electrification drive the global residential washing machine industry. In addition, rising affordability of washing machines and increased urbanization have fueled the demand. However, the availability of laundry shops and growth in online laundry services hinder the growth.

The fully automatic market is expected to grow at a CAGR of 5.6 percent, in terms of value. The semi-automatic and dryer segments are anticipated to grow at 5.3 percent and 5 percent respectively, in terms of value. The fully automatic segment is estimated to be the most lucrative one and holds a large proportion of the market size. The models between 6 kg and 8 kg by machine capacity are expected to dominate the market. In addition, they are better at saving electricity compared to the other washing machines capacity. The capacity range is expected to grow at a CAGR of 5.7 percent. The below 6 kg and above 8 kg segments are anticipated to grow at a CAGR of 5.2 percent and 5 percent, respectively.

The Asia-Pacific market witnessed rapid growth, as residential washing machines have gained popularity only recently owing to their compatibility and user-friendliness features. In addition, rapid urbanization, and an expanding middle-class population drive this market. In 2016, Asia-Pacific and Europe collectively accounted for more than 73 percent of the global residential washing machines industry. Moving forward too, the Asia-Pacific region is projected to grow at the highest rate, followed by LAMEA. The region is expected to grow at the highest CAGR of 6.5 percent, in terms of value.

Smart washing machines. A smart connected washing machine operates by connecting to the internet using the household
wi-fi, thereby enabling the user to get real-time information about the washing along with remote access and control. Numerous technological advancements have been carried out in these washing machines during the last decade, leading to their higher efficiency, in terms of saving water and electricity. This in turn makes the smart connected washing machines more lucrative to the consumer.

The global smart connected washing machines market is projected to reach USD 13,631 million by 2023, growing at a CAGR of 22.6 percent from 2017 to 2023. The residential segment is expected to dominate the market, as these smart connected machines have gained high preference among residential consumers, as they have prefect laundry washing capabilities for most residential users globally. The residential segment is anticipated to grow at a high CAGR of 22.8 percent.

Increase in use of IoT and rapid urbanization drive the growth of the global smart connected washing machines industry. Moreover, increase in efficiency of smart connected washing machines is expected to boost the market growth. However, the availability of laundry shops and growth in online laundry services hinder the growth of the market.

Front-load smart connected washing machines hold a large market share as compared to top-load smart connected washing machines, and is estimated to be the most lucrative segment, due to high consumer preference, lesser human intervention requirement to operate it, higher energy and water efficiency, and improved stain removal ability. They are expected to grow at a high CAGR of 23.1 percent.

Technology update

Technological and innovative advancements related to washing machines present a major opportunity for manufactures operating in this market. Numerous advancements have been carried out in these machines during the last decade, leading to their higher efficiency, in terms of saving water and electricity. Introduction of smart washing machines has led to a major increase in demand. Wi-fi is being extensively used in smart washing machines, while near-field communication is also being explored to establish radio communication with smartphones and to bring them in proximity.

Features such as auto optimal wash, smart control, eco-check, smart diagnosis, smart nudges, automatic detergent dispensing, power wash system, and steam care functions have been launched. Many models are also incorporating self-cleaning elements. These features often use soaking and high-speed spinning to clean them without the use of chemicals. Programs with quicker cycles but running similar efficiency are being added. Considering consumer’s busy lifestyle many appliance makers are introducing speedy cycles/quick programs. The segment is living the twin-drum age – be it twin washers or washer and dryer below one another. The latest technologies also help in reducing the usage of materials such as detergents and softeners. The quality of water used is also monitored. The hardness of water is determined. Consumers are getting options to add clothing mid-cycle, lower energy usage, optimize wash cycles, and control cycles remotely. Air refresh technology is also among the most popular technologies used in the washing machines. This technology initiates the induction of fresh air into these machines and heating the air too. Washing and drying of clothes is done with the help of this air and steam.

Fast washing machines. Manufacturers are introducing models which consist of a large main drum with a separate plate at the back that moves independently to decrease time required and increase efficiency. Some washing machines have a washer/dryer that claims to wash and dry up to 0.5 kg in 29 minutes and up to 2 kg in 1 hour, whereas some new machines can wash and dry up to 5 kg in less than 3 hours.

Futuristic stain removal. The latest technology now looks set to help with stain removal in laundry. Companies are also developing stain remover pens, which when used with water and detergent, send tiny vibrations through fibers to loosen stains particle by particle so they are more easily removed when washed. There are stain removal assistants using mobile apps letting the user photograph the stain and an unsoiled area of the fabric, enter the type of fabric and color, and the app will suggest the appropriate wash cycle.

Washer dryers. Both clothes and dishwashers are utilizing smart technology to make sure the user never runs out of detergent. Combined with auto-dosing capabilities, several companies have Amazon Dash support which will automatically re-order detergent when stocks are running low.

Outlook

The washing machines category is poised for strong long-term growth globally and its penetration is likely to rise rapidly. The market could invite an optimistic impact as newer technologies take precedence to address the demand for water and power efficient, next-generation products. When compared with 11.3 percent CAGR in per capita GDP over FY10–17, the average selling price of washing machine increased by only 5 percent over the same period. Thus, the affordability of washing machines has improved considerably over the past 7–10 years while its growth outlook is bright as the washing machine is becoming a necessity in a modern lifestyle.

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