For the second consecutive yr, gross sales of air conditioners (ACs) and fridges have been hit in the course of the peak season of April and Could as a result of localised lockdowns and restrictions on account of surging Covid instances within the nation.
The pandemic state of affairs has pressured corporations to recalibrate their goal and go for pre-Covid (2019) gross sales quantity with out being too aspirational.
Main gamers within the section together with Voltas, Daikin, Blue Star, Panasonic and Haier reported virtually 75 per cent dip in April gross sales this yr compared with the identical month of 2019 efficiency. Furthermore, Could 2021 has been an entire washout to this point for them.
On prime of the current state of affairs, shopper sentiment has been additional hit amid experiences that there could also be a 3rd wave of the pandemic, which additional dampens probabilities of a restoration in gross sales of compressor-based cooling merchandise similar to ACs, fridges and so forth, as individuals are preferring to maintain bills on maintain until the time Covid state of affairs improves.
Main AC maker Voltas stated it was anticipating a double-digit progress this fiscal however now the second wave and subsequent restrictions have led to a recalibration of targets.
“Initially whereas budgeting, we had numerous aspirations to develop greater than double digits — however now as a result of first quarter getting washed out, our endeavour will likely be to meet up with final yr,” Voltas MD and CEO Pradeep Bakshi informed PTI.
Expressing related views, Daikin Airconditioning India MD & CEO Kanwal Jeet Jawa stated: “If we’re capable of obtain what we now have performed in 2019, that may be ok.”
Final yr, April was washed out and Could was simply 10 per cent (of Could 2019) and June was lower than 25 per cent of (June 2019 gross sales).
Gross sales in April this yr had been 80 per cent of these clocked within the corresponding month of 2019 as solely first 15 days of the month had been good when it comes to actions. Could is wanting like an entire washout and June might be 75 per cent of 2019, Jawa stated.
Panasonic India and South Asia President and CEO Manish Sharma stated the sale of AC began in March on a constructive notice, however as a result of sudden surge within the variety of instances within the second wave and a lot of the states imposing partial lockdowns, summer season gross sales are being hit.
“We’re protecting an in depth watch on the state of affairs however, we might even see a lack of over 50 per cent in opposition to gross sales projections in the course of the ongoing quarter (April-June). We’ve inventories in inventory to make sure a easy buy expertise for our companions and customers throughout offline and on-line channels,” he stated.
Usually, the April-June quarter, as mercury rises within the peak summer season, contributes round 30 to 35 per cent to general gross sales of ACs and different compressors based mostly cooling merchandise.
Based on the Client Electronics and Home equipment Producers Affiliation (CEAMA), your entire month of Could, which is a interval for peak gross sales of cooling merchandise, can be virtually a washout for the business, as solely 15 per cent of the market is open and footfalls at shops are negligible.
“I’m wanting on the pattern”, which is analogous to that of final yr, stated CEAMA President Kamal Nandi.
Based on Haier Equipment India President Eric Braganza, the one hope is these lockdowns and curfews are restricted until June however the issue is that by the tip of that the season can be over.
“It is a essential month and if you happen to lose it, then you can’t make up,” he stated including that in AC section, there can be no progress and it could be like final yr. “We had been anticipating this yr to be higher than 2019 however once more it could like 2020.”
Nonetheless, corporations similar to Blue Star are nonetheless hopeful and expect double-digit progress regardless of these obstacles.
Given the poor penetration stage of the class, gross sales ought to decide from June onwards helped by elements similar to pent-up demand and work-from-home, and so forth.
“My estimate is 10 to fifteen per cent progress for the yr,” stated Blue Star Managing Director B Thiagarajan.
Bakshi stated Voltas will attempt it greatest to catch up within the subsequent few quarters.
“By way of matching as much as our efficiency in final to final yr (2019-2020), it’s too early to say proper now because it depends upon a number of elements. If the summer season season is longer, humid, harsher and continues until July, possibly we will match these numbers,” he stated.
Nonetheless, CEAMA president Nandi warns a few doable hike in costs for residential ACs on account of continued inflationary strain on inputs.
“Business has to take the steadiness hike of 20 per cent, they’ve already elevated 12 per cent to this point and has to take the remaining 8 per cent. A hike will occur as issues develop into regular. This complete influence of the value enhance and disturbance and disruption would have a problem within the second quarter additionally,” stated Nandi.
In contrast to final yr, when the market picked up in July and August, this yr individuals are speaking of the third wave, Haier’s Braganza cautioned.
“Final yr after the pandemic individuals weren’t scared. This yr, the psychological body of individuals goes to be totally different. Individuals are going to economize anticipating the third wave as individuals must incur cash on the medical invoice. I don’t assume that the market would reply the best way it had performed final yr,” he stated.
The Indian residential AC market is estimated to be round 7 to 7.5 million items each year and over 15 corporations compete within the section.