For the second consecutive 12 months, gross sales of air conditioners (ACs) and fridges have been hit in the course of the peak season of April and May as a result of localised lockdowns and restrictions on account of surging Covid instances within the nation.
The pandemic scenario has pressured corporations to recalibrate their goal and go for pre-Covid (2019) gross sales quantity with out being too aspirational.
Leading gamers within the section together with Voltas, Daikin, Blue Star, Panasonic and Haier reported nearly 75 per cent dip in April gross sales this 12 months compared with the identical month of 2019 efficiency. Moreover, May 2021 has been a whole washout up to now for them.
On prime of the current scenario, client sentiment has been additional hit amid experiences that there could also be a 3rd wave of the pandemic, which additional dampens possibilities of a restoration in gross sales of compressor-based cooling merchandise comparable to ACs, fridges and many others, as persons are preferring to maintain bills on maintain until the time Covid scenario improves.
Leading AC maker Voltas mentioned 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 while budgeting, we had a lot of aspirations to grow more than double digits — but now due to the first quarter getting washed out, our endeavour will be to catch up with last year,” Voltas MD and CEO Pradeep Bakshi informed PTI.
Expressing related views, Daikin Airconditioning India MD & CEO Kanwal Jeet Jawa mentioned: “If we are able to achieve what we have done in 2019, that would be good enough.”
Last 12 months, April was washed out and May was simply 10 per cent (of May 2019) and June was lower than 25 per cent of (June 2019 gross sales).
Sales in April this 12 months have been 80 per cent of these clocked within the corresponding month of 2019 as solely first 15 days of the month have been good by way of actions. May is trying like a whole washout and June may very well be 75 per cent of 2019, Jawa mentioned.
Panasonic India and South Asia President and CEO Manish Sharma mentioned the sale of AC began in March on a optimistic word, however as a result of sudden surge within the variety of instances within the second wave and many of the states imposing partial lockdowns, summer season gross sales are being hit.
“We are keeping a close watch on the situation but, we may see a loss of over 50 per cent against sales projections during the ongoing quarter (April-June). We have inventories in stock to ensure a smooth purchase experience for our partners and consumers across offline and online channels,” he mentioned.
Normally, 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 primarily based cooling merchandise.
According to the Consumer Electronics and Appliances Manufacturers Association (CEAMA), the complete month of May, which is a interval for peak gross sales of cooling merchandise, could be nearly a washout for the business, as solely 15 per cent of the market is open and footfalls at shops are negligible.
“I am looking at the trend”, which is analogous to that of final 12 months, mentioned CEAMA President Kamal Nandi.
According to Haier Appliance India President Eric Braganza, the one hope is these lockdowns and curfews are restricted until June however the issue is that by the top of that the season could be over.
“This is a crucial month and if you lose it, then you can not make up,” he mentioned including that in AC section, there could be no progress and it might be like final 12 months. “We were expecting this year to be better than 2019 but again it would like 2020.”
However, corporations comparable 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 choose from June onwards helped by elements comparable to pent-up demand and work-from-home, and many others.
“My estimate is 10 to 15 per cent growth for the year,” mentioned Blue Star Managing Director B Thiagarajan.
Bakshi mentioned Voltas will strive it finest to catch up within the subsequent few quarters.
“In terms of matching up to our performance in last to last year (2019-2020), it is too early to say right now as it depends on several factors. If the summer season is longer, humid, harsher and continues till July, maybe we will be able to match those numbers,” he mentioned.
However, CEAMA president Nandi warns a few potential hike in costs for residential ACs on account of continued inflationary stress on inputs.
“Industry has to take the balance hike of 20 per cent, they have already increased 12 per cent so far and has to take the rest 8 per cent. A hike will happen as things become normal. This whole impact of the price increase and disturbance and disruption would have a challenge in the second quarter also,” mentioned Nandi.
Unlike final 12 months, when the market picked up in July and August, this 12 months persons are speaking of the third wave, Haier’s Braganza cautioned.
“Last year after the pandemic people were not scared. This year, the mental frame of people is going to be different. People are going to save money anticipating the third wave as people have to incur money on the medical bill. I do not think that the market would respond the way it had done last year,” he mentioned.
The Indian residential AC market is estimated to be round 7 to 7.5 million items every year and over 15 corporations compete within the section.
