An employee inserts a screw on an air conditioner cabinet. (Photographer: Udit Kulshrestha/Bloomberg) 

Air Conditioner Makers Expect High Double Digit Jump In Sales In 2018

Air conditioner makers, including Voltas, Daikin and Panasonic, are expecting a high double-digit growth in sales this year on account of reports of rise in average temperature this summer, increasing disposable income and availability of power in smaller cities.

Samsung, Godrej Appliances, Haier and Intex, too, expressed optimism over double-digit growth in air conditioner sales numbers.

Although, cost of air conditioner have gone up by 10 to 15 percent this year due to the implementation of new ISEER (Indian Seasonal Energy Efficiency Ratio) ratings, makers are unfazed about it and are expecting that the inverter technology-based units would record three times growth and contribute 30-35 percent of the total sales.

While the change of energy efficiency tables has made the cost of acquiring an air conditioner dearer. However, the forecast of a hot, tropical summer, low penetration of air conditioners in India coupled with an increase in purchasing power of the consumers would propel the category.
Pradeep Bakshi, Managing Director and CEO, Voltas

Moreover, adoption of inverter air conditioners has increased in the last couple of years owing to improvement in consumer understanding of the technology, which is more energy efficient, he said.

The cost of acquisition of this segment has also decreased due to which it has become more affordable for consumers. Hence, we see an increased adoption of inverter ACs this season as well, it should contribute close to 25 percent of overall AC sales.
Pradeep Bakshi, Managing Director and CEO, Voltas

Besides, the makers are expecting healthy growth from small town markets in overall sales this year as power availability has increased.

The penetration of air conditioners in India stands at around 4 per cent, while in China it is 60 percent, which itself is a huge opportunity, said Godrej Appliances Business Head and EVP Kamal Nandi.

“Thanks to the initiatives taken by the government, the reach and quality of electricity is improving which will help in increasing the penetration of all home appliances including ACs,” Nandi said.

Daikin India MD and CEO Kanwal Jeet Jawa too stated that demand from tier II and III is picking up.

“Now AC is gradually becoming a mass product. Earlier people who used to use AC in their workplace, are now more used for it,” he said.

Employees work on the outdoor units of split system air conditioners on an assembly line. (Photographer: Prashanth Vishwanathan/Bloomberg)
Employees work on the outdoor units of split system air conditioners on an assembly line. (Photographer: Prashanth Vishwanathan/Bloomberg)

Presently, the Indian room air conditioner industry is estimated to be around 5.5 to 6 million units, said Jawa. Around 15 to 20 companies operate in this space.

I expect that this industry to grow anywhere between 15 to 18 percent on the residential side. Daikin is aiming to clock a 25 percent growth this fiscal because we are growing more than the market from last 8 years.
Kanwal Jeet Jawa, Managing Director and CEO, Daikin

According to Haier India President Eric Braganza, with the increasing disposable income of the consumers and the rise of middle class, AC has now become a necessity and is not a luxury anymore.

“We are expecting a growth of 60 percent over last year. Premium range would contribute 50 percent of our business,” said Braganza.

Panasonic India Business Head Air Conditioners Group Gaurav Sah said the company is targeting an 8 per cent market share this year.

“We are expecting the north region to grow in line with the rest of the markets,” he said.

On the other hand, Intex Technologies, which has entered into the AC segment recently, is expecting 6 per cent market share of the air-conditioning segment in the next two years and is betting big small towns.

"Intex has priced its range of products 15 percent to 20 percent lower than the established players to make it more affordable," said Intex Technologies Director Nidhi Markanday.

Samsung India Vice President, Consumer Electronics Business Rajeev Bhutani said:
“We are expecting to outpace the industry with a healthy double-digit growth.”

Besides, the makers are also expecting online channel to contribute up to 7 per cent of their total sales and expect it to increase because of smartphone penetration and availability of free data.

“At an industry level we expect 6-7 percent contribution from online sale in the AC segment,” said Nandi.