Partha Sen , Head – Marketing , Johnsons Controls – Hitachi Air Conditioning India Ltd.
India is set to become the fifth largest consumer durables market in the world. From a revenue of approximately USD 15.45 billion in FY17, the Indian consumer durables sector is expected to reach USD 46.54 billion in FY20 which is a clear indicator of changing industry dynamics (India Brand Equity Foundation, 2017). The Make in India initiative of the government has been the main impetus behind many domestic and Chinese manufacturers to invest in local manufacturing facilities to produce more affordable goods. The National Electronics Policy 2012 also plays a pivotal role in this as it aims to create a globally competitive ecosystem for all manufacturers in India.
The Indian room ACs market is all set to undergo a phenomenal upheaval in the next 5 years. Factors such as changing consumer lifestyle, awareness about green and energy efficient products, rising per capita income, and extremely hot and humid climate through most part of the year are playing a critical role in this. In a category, where the market penetration is just 4–5 percent (against the world’s average of 30 percent), the Indian room air conditioners market is set to grow from 4.7 million units in FY17 to 7.2 million in FY20, indicating a growth of approximately 15 percent CAGR.
The industry has been witnessing a continual shift toward energy-efficient ACs (5-star/inverter), which contributes ~30–35 percent of overall industry volumes. According to Bureau of Energy Efficiency (BEE), all inverter technology based ACs need to have compulsory rating from 2018. Consequently, the rating for fixed and variable compressors will be merged and the split AC market is expected to shift to inverter technology. Inverter ACs are projected to account for 30 percent of the market by FY18 and 50 percent by 2020 (Motilal Oswal, Room Air Conditioners 2017).
Riding on the tide of these changes, Hitachi, which is India’s most premium and third largest selling air conditioners brand, has expanded its lineup to 102 models this year. With the shifting trend toward inverter ACs, Hitachi’s 18 percent RAC lineup is of 5-star green, inverter ACs. Keeping in mind the environmental issues, Hitachi’s entire inverter lineup is green with R410A refrigerant, and in fixed-speed ACs and window ACs, Hitachi has introduced R32-based models. Hitachi has also introduced a new expandable inverter air conditioners series this year which is perfect for India’s extreme weather conditions.
About the domestic refrigerators industry, from 2006 to 2016, this industry has grown at a CAGR of 9 percent with a sale of ~ 10.7 million units. This growth can be attributed to the same factors listed above for room ACs. However, the penetration of refrigerators is still very low in India in comparison to other emerging markets, with 75 percent of the demand being accounted mainly by urban areas. Over the next 5 years, the refrigerator segment is slated to grow at a CAGR of 10 percent in volume terms. Direct cool (DC) and frost free (FF) segments grew from 5 to 7 percent from 2006 to 2016. The DC segment is set to grow at a slightly better pace than the FF segment as DC models occupy lesser space, are available at lower price points, and preferred by consumers in semi-urban and rural areas. The consumer preference is also moving toward high-capacity models in the tier-I and metro cities.
Hitachi offers premium refrigerator series – Made in Japan (MIJ) and side-by-side three door refrigerators in high-capacity models. These refrigerators offer latest technologies like inverter technology with dual fan cooling, vacuum insulation panels, intelligent controls etc. Hitachi also has a complete frost-free range with 21 models and 45 SKUs – starting from 253 liter gross to 722 liter gross capacity in two-door, three-door and six-door segments.
Thus, with its innovative product range, best-in-class indigenous manufacturing facilities, world class R&D facility, and a continuous endeavor to give its customers a better post sales service experience, Hitachi aims to reach every Indian household because we believe every home deserves Hitachi cooling.