DAIKIN
Roshan Sirohia
Director,
Cruise Appliances Pvt. Ltd.

Steady Rise in Demand for Energy-Efficient Inverter Acs

Indian air conditioner market is going through a rough patch at the beginning of 2019 primarily on account of the delayed summer season. Seasonal trend has been week since the last quarter of 2018 for AC companies because of a tepid festive season, which led to minimal secondary sales. The import duty hike, coupled with the rising cost of raw material and rupee depreciation versus the US dollar, also led to an 8-10 percent increase in price.

In the current year, the most anticipated quarter looks disappointing but the long-term prospects of the industry are promising. Prevailing tropical weather conditions and the availability of financing options necessitate the purchase of air conditioners, and aid the demand as well. We can expect modest growth in the room ACs.

Revision of the energy-efficiency norms has been applicable from the first day of the calendar year. With the new energy star rating, what was earlier considered a 5-star is now a 3-star, resulting in almost 20-percent price hike in 5-star inverter ACs. However, statistics show that consumers have started accepting the newer and energy-efficient ACs. A growth of 10–15 percent in the 5-star, as well as 3-star models, compared to the single-digit growth in the last five years has been observed. With BEE raising the energy efficiency in 2020, the market is likely to favor inverter air-conditioning units. This will have an impact on the window and the fixed-speed AC market to a fair extent. This is because the necessity of window AC and fixed-speed ACs exists in Tier-II and Tier-III cities of the North and the South regions, which are dependent on factors such as climate and reliability of power supply. Compared to other countries, we have a very low penetration level in Indian household, which gives us enough space to grow the market size.

On the other hand, demand for inverter technology is set to rise as it aims to address the most important air conditioning need of the middle class and upper middle class of the country, i.e., air purification and power consumption over and above the other benefits. This is reflected easily with the growing demand of the buyers who are affected by the threatening air quality and pollution around them. Today, consumers do an in-depth research before investing in an AC, especially an inverter AC that balances their cost of ownership and cost of usage. This is reflected in a contraction of demand for 5-star ACs due to higher cost compared to 3-star AC units. But, there is a constant base for 5-star models from premium users whose usage spans from 12 to 15 hours a day or more, and who are energy conscious. However, since the rating revision in 2018, the majority of the consumers have reduced the usage to 7 to 8 hours every day for which a 3-star AC is an ideal choice.

Given that the alarming rise of air pollution and deteriorating quality of indoor and outdoor air is resulting in serious health implications, a holistic air purification system has become a necessity in today’s scenario. AC manufacturers are constantly investing heavily in research and development to integrate air-purification technology with energy-efficient air-conditioning system. Hence, we can expect a range of cutting-edge technology products supporting powerful air purification, advanced filtration, and innovative use of artificial intelligence to offer to the consumer. Moving to a platform, which is witnessing substantial growth for AC marketing and sales, namely, online market, its potential is estimated to be around four lakh units, which is almost 10 percent of the total AC market. Many brands have made the most of the online market by promoting inverters instead of fixed-speed, which is considered to be an outgoing technology for many metro cities. Though this concept is slowly catching up in metros for now, it is expected to progress quickly with the growing access of internet in the developing regions of India.

The current year looks promising as now there is stability in commodities and currencies, though we might observe minor blips for a while, bit of uncertainty, and very slow rising demand caused due to summer being almost three weeks late. For a heat-dependent business, it has resulted in slightly slower growth in the month of March. However, rains are forecast to be late, which is a positive indication for a longer and hotter summer.

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