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Outlook and Trends – AC Industry

Through the years in consumer durable industry, we have seen ACs coming in as seventh priority behind fans, mixer-grinders, TV, refrigerators, air coolers, washing machines in that order, in consumer purchasing need-set. Also, India has been one of the lowest AC penetrated market, with close to 8 percent of AC penetration. Although India’s market is still only one-tenth of the Chinese room air conditioner (RAC) market, its market growth in last year was remarkable with sales of 5.2 million units, with a high increase in population and a high potential for economic growth.

With hotter summer creating hotter demand in ACs, improving macro-economic conditions and consumer’s increasing disposable incomes, cheaper financing options, development of smarter cities, and greater product availability with expansion of electrification, this year is expected to make a dent in the AC market. Also, brands are coming up with higher energy-efficient options and new features suitable for Indian conditions helping faster adoption. India is likely to grow at 12-15 percent in next couple of years compared to the global growth rate of 8.5 percent led by the factors mentioned. Split AC will continue to grow its part of the pie from the current 85 percent, with inverter ACs which are currently almost one-third of pie, to increase to almost half in volumes by 2020.

We at Onida are continuously putting our consumer interest in front, while researching the latest market movers and shakers. In the past, we were the first to identify and address the need for instant cooling and to measure actual savings, first to launch pre-cool SMS AC, launch My Favorite, and to launch ACs with Wi-Fi and app control. These topline features have then been widely used by other players and has gained acceptance in the market too.

The question then arises is can we do something more innovative to solve consumer problems? The answer lies in controlling AC with voice command. Globally, data shows 41 percent of people who own a voice-activated speaker say it feels like talking to a friend of another person and also by 2022, trend shows 80 percent of our interactions with devices will be non-touch. More importantly, 50 percent of the searches will be via voice by 2020. In line with trend, we have meticulously worked on our in-house ViOT technology, which helps consumer to control AC with only their voice through Amazon’s Alexa app and gives a frictionless human interaction, addressing the convenience and hassle-free needs of the consumers. Also, recognizing the need for families to get more value from the AC in terms of the cooling capacity, we have also launched magnified cooling technology with multiplier inverter technology which deliver 120 percent higher cooling than the rated capacity. We have set our eyes on a bumper sale through our thousands of offline partners and e-commerce partners such as Amazon.

It is heartening to see industry along with channel partners investing in educating the customer on the advantages of inverter vs. non-inverter ACs and also importance of power saving/cooling capacities along with smart ACs, which seem to be the flavor of this season. Since this category is medium to high involvement category, we also have taken steps of reaching out to consumers in form of infographic videos, blogs, how-to and unboxing videos talking on the things to look out for while buying an AC and elaborating on how to operate smart ACs via Alexa.

Innovation is and would be a way forward in this category, with players who invest a lot in R&D and consumer research winning the day. We always endeavor to listen to the consumer chatter and invest in the best-of-the-lot products which will solve customer’s problems. Slowly, we have seen industry’s marketing strategies moving from mass advertising to personalized targeting and selling, and recently more into more educative and consultative approach to selling ACs – exactly what customers need!

Expecting a very robust season ahead, with AC sales already picking up from last month due to soaring temperatures.

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