Roshan Sirohia , Director , Cruise Appliances Pvt. Ltd.
Amid forecasts for a hotter 2018 summer, the air conditioning industry is set to witness a good growth in sales numbers. New norms and rising commodity costs have resulted in price hikes.
Steady rise in temperature, change in the energy efficiency norms, and rising raw material prices have spiked the prices of the AC units this year by 5–10 percent. The star rating methodology has been upgraded by the Bureau of Energy Efficiency (BEE) according to which the AC units which were earlier 3-star would now become 1-star. The new ISEER rating combined with the rising cost of copper and other raw material has resulted in 5-6 percent price hike and may be increased further.
Also, because of the new technologies, the input cost has gone up and so it will have an impact on the customer prices especially the 5-star ACs prices compared to last year. The price rise however is unlikely to affect the demand looking at the consumer buying pattern that has undergone a drastic shift.
Usually a consumer spends on upgrade of the existing product which means a regular split AC is now replaceable by an inverter AC which is because of the increasing disposable income in the metro cities. In the tier-II and tier-III cities of the country though, there are a lot of emerging buyers who are first-time AC buyers and are willing to upgrade the existing units. This makes the tier-II and tier-III cities a very encouraging market to enter and as a result an air conditioner becomes a mass product. It has become more of a necessity in the last couple of years.
Another channel which aids this consumer buying behavior is the online channel which is catching up because of the smartphone penetration and easy internet access.
Furthermore, the annual summer forecast predicts that the summer of 2018 will be hotter and the temperature is expected to go up by a degree than usual. The summer heat has already arrived in the major parts of the country because of which the focus will now be on penetrating in the small town markets which have the capacity the help see a healthy sales growth.
Of all the consumer appliance segments, the air conditioners category is growing rapidly and specially the inverter air conditioning range. This growth comes from the increased awareness/adaption of the inverter air conditioners and the understanding of its energy efficient technology amongst the customers. Technologically advanced features like wi-fi, heating, cooling, farther airflow, deodorization, dehumidification, and air purification have become a must and are now available in different tonnage at an economical price.
Hence, the demand for inverters has gained momentum and is sure to see a hike in the second half of the year. This is in line with the global trends that the Indian market is beginning to shift toward inverter air conditioners from regular or fixed-speed ACs.
Overall, air conditioners are a growing category and the market will witness a variety of highly energy efficient and eco-friendly air conditioning technology. Also, the need for low energy and electricity consuming air conditioning units drives the demand.
Hence, in the coming years the demand for air conditioners will be fuelled for energy efficient products that are technologically advanced and compatible with the diverse weather conditions of India.