AC makers under a cloud as summer sales plunge in the North

Weather has played spoilsport for the second year in a row, with air conditioner (AC) makers seeing sales plunge by 10-15 per cent in the north, owing to unexpected rains that lashed Delhi last week. In general, the weather across the north has been cool over the past week, which does not bode well for AC makers. The north is a crucial region for most manufacturers, contributing about 35 per cent to sales. Any impact there will hit manufacturers hard, say market experts.

Thanks to a cool summer last year, too, the 3.6-million-unit AC market fell by 10-15 per cent. The year before, AC sales grew by 30-40 per cent.

AC makers, however, are a worried lot. Now not only because April so far has been weak for sales, but also because March was not as good as expected. An extension of the winter into March across India meant that pick up in sales was weak during the start of summer. Officials at Hitachi, which makes a range of air conditioners, say that sales grew at six-eight per cent only, last month. The scenario has been no different with other manufacturers, which saw single-digit growth in sales. The only hope then was that there would be a pick up in April.

While spokespersons at LG and Samsung said it was too early to comment on how AC sales would pan out in the coming months, a few others are not as optimistic.

Suresh Kumar Bandi, deputy managing director, appliances, Panasonic says, “If this weather continues then I don’t expect AC sales to be strong this year.”

Weathermen predict that Delhi will continue to see intermittent showers with cloudy weather during the current week.

“The peak period for ACs is the month of May, so a pick up could well happen,” says Anirudh Dhoot, director, Videocon Industries.

Some manufacturers are hoping at least rest of the summer will be hassle-free. “The west and the south have seen sunny weather, so all hope is not lost,” says a Samsung spokesperson.

The south contributes 31-32 per cent in terms of sales during the summer. The west contributes 21-22 per cent and the east 12 per cent.

In the last few years, most manufacturers have been aggressive with their launches in anticipation of growth. Apart from the weather, AC makers have also had to grapple with exchange rate fluctuations and input cost pressures this year. In comparison to last year, AC prices this year are up by 8-13 per cent.