AC manufacturers expect strong growth this summer led by unseasonal weather
- IMD forecasts a searing summer with “above normal” temperatures in most of northeast, eastern, central India and parts of northwest India.
- Japanese electronics brand Panasonic expects a good summer with double digit growth.
- JM Financial is of the view that demand for ACs will pick up this March and dealers are stocking up inventory.
AdvertisementThe summer of 2023 got off to an early start, and even with gusts of hail and wind, unpredictable and unseasonal weather is bringing cheer to makers of air conditioners.
“We believe summer-23 is likely to be a healthy season for AC manufacturers, given soaring temperature and higher probability of occurrence of heat waves across cities and normalisation of commercial activities,” said a report by JM Financial.
The report suggests that AC demand will pick up this March, and dealers have already started stocking up inventory in anticipation of good sales.
Analysts at JM Financial believe that this year is widely expected to be a little hotter than the previous two years globally “mainly because of the expected end of the strongest ever La Niña event”.
The India Meteorological Department (IMD) too forecasts a searing summer with “above normal” temperatures in most of northeast, eastern, central India and parts of northwest India.
In fact in March, several parts of the country have been impacted with erratic environmental changes including early monsoon, hailstorms and strong winds. This was right after an unusually hot February.
Besides, it also expects heat waves during March-May in most parts of India, except for the northeastern states, Jammu and Kashmir, Uttarakhand, Himachal Pradesh, Kerala and coastal Karnataka.
Hot summer to bring hot sales for AC manufacturers
Japanese electronics brand Panasonic also expects a good summer with double digit growth.
“At Panasonic, we are expecting healthy growth for our summer products such as ACs, refrigerators, etc., to name a few. Last year for our cooling products like ACs and refrigerators, we registered around 35% (for April 2022 till February 2023 as compared to the same period in 2021). this year we are hoping for continued growth momentum registering double-digit growth,” said Fumiyasu Fujimori, MD, Panasonic Marketing India, Panasonic Life Solutions India.
High demand from Mumbai & Bengaluru
Analysts say that demand has already picked up in anticipation of a hot summer. The report stated that demand in all major cities like Delhi, Chennai, Hyderabad and Kolkata witnessed moderation currently, whereas Mumbai, Bengaluru and certain pockets in Ahmedabad are witnessing pickup in demand given the early onset of summer.
AdvertisementThe brokerage firm has stated that Voltas remains their top pick, followed by Blue Star and Amber Enterprises.
Analysts feel that rising disposable income, improving standard of living and willingness to spend on comfort is the reason why demand for such white appliances is increasing.
“With the increase in disposable income, rapid urbanization, improving standard of living, and easy financing options, consumers are willing to spend on appliances that are energy-efficient, smart, connected, and provide comfort and convenience that enhances their lifestyles,” said JM Financial.
The Consumer Electronics and Appliances Manufacturers Association is expecting sales in the summer periods of March to May this year to be anywhere between 15% to 20% higher than last year, according to a report by CNBCTV18.
Channel check with dealers by JM Financial shows that demand for Voltas and other brands like Lloyd, Hitachi and Panasonic is better than previous years.
AdvertisementThey say that currently, demand for products of Voltas remains high, especially in lower tier cities because of higher brand awareness. However, with increased product offering by other brands, dealers anticipate pickup in demand from other brands as well.
Analysts say Blue Star continues to be a preferred brand in Southern markets, while their presence in the North is also increasing.
Other players such as Lloyd and LG continue to be preferred brands of choice for customers in South India whereas Daikin, Hitachi, LG and Panasonic are prominent in West India, says the report.
Listed AC manufacturers
|% change YTD
|Amber Enterprises India
|Johnson Controls Hitachi Air Condition
Room for growth
Besides, the Indian summer has broken multiple heat records over the past decade and created a strong demand for air conditioning in Indian homes and offices, says Statista, a data platform.
Advertisement“Increasing demand for home appliances , along with a fairly low penetration rate, has left the Indian air conditioner market with plenty of room to grow and is estimated to reach 9.7 million units in the financial year 2023,” said Statista.
Adding to the celebration, since October 2020, the Indian government has banned imports of ready-to-install air conditioners, providing a boost to manufacturers in India.
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