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Outlook for AC Industry 2019

The air conditioner industry has seen a substantial change in the past couple of years. Once considered a luxury, the air conditioners are now perceived as a necessity in Indian household. Given the tropical climate, the soaring temperatures are likely to drive demand for air conditioners in 2019 even though penetration remains low. The summer last year was not good for the AC industry. This year, we are very optimistic, given that the temperatures will be high this summer and consumers will buy air conditioners to beat the heat. We are also experiencing a delayed start to the season, which is a good sign as in the past, such summers have been harsh.

In line with the climate change debate happening around the world, 18 of the 19 hottest summers have been 2001 onwards – so we are looking at progressively hotter summers, year after year. India has been no exception either. Moreover, air conditioner was previously considered as a seasonal product, used mostly during summer months. However, with the changing consumption behavior and climatic extremities experienced, manufacturers have now started offering heating/cooling options so that it could be used throughout the year.

In terms of cities, we see higher penetration in metro markets to the tune of 9 percent but abysmally low in rural markets at 1.6 percent. Overall, the penetration of ACs in India is 3.6 percent, whereas in China the AC penetration is almost 70 percent. Air conditioners are still in the highest tax slab, at 28 percent. Lowering the tax slab would make air conditioners more affordable and help accelerate the penetration levels.

Majority of the AC consumers do an in-depth research before purchase and are well aware that ACs are power guzzlers. They prefer to choose an AC, which balances out the cost of ownership and cost of usage. The BEE star rating regime, which is also well popularized by the Government of India, is a great yard stick when it comes to energy consumption of ACs. The current star-rating table, which came into force in 2018, is in line with the best energy-efficiency standards, which is currently in effect in other developed countries. The belly of the market will continue to be 3-star AC, but post implementation of the new standard from January 2018, we are witnessing a de-growth in the 5-star segment due to increased acquisition cost for the end consumer. Buyers are definitely getting energy conscious, which can be observed in the drastic shift towards inverter split ACs.

One of the major trends observed is with respect to the product mix of ACs – between inverter and fixed-speed splits. There is a drastic shift in the product mix towards inverter split ACs to the tune of almost 50 percent.

Air conditioners emit greenhouse gases, aggravating the global warming issue. Taking into account the country’s sustainability goals, we bring a slew of 38 new Godrej AC models – eco-friendly ACs with lowest global warming potential. This new range of ACs uses the greenest refrigerant R290 along with R32, thereby offering zero ozone-depleting potential and minimum global-warming potential. For instance, an AC with R22 refrigerant having GWP of 1810, would require about 49 trees to offset its greenhouse gas emission for one year, while a 5-star AC powered by R290 refrigerant comparatively utilizes 29 trees less for the same. Packed with multiple features and technology – be it green inverter technology, or blue fin anti-corrosion protection, or smart IOT-enabled diagnosis, or twin-motor rotary compressor – the ACs deliver powerful cooling, energy efficiency, and least global warming. With over 30 percent of the range in the 5-star segment, we have ensured that both consumers and the environment gain by using these eco-friendly air conditioners.

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