Consumer durables firms cheery on old, new years

Strong demand forecasts, after upbeat sales; new and replacement buying remains up.

This year has closed on a high note for the Rs 35,000-crore consumer durables sector. Overall growth, according to the Consumer Electronics and Appliances Manufacturers Association (Ceama), for the current year was 12-13 per cent, compared to last year’s 10 per cent. The year before, in 2008, the industry saw only single-digit growth, on account of the then slowdown.

But with the industry having breached the symbolic 10 per cent mark this year, companies are looking forward to the new year with renewed vigour. Demand for consumer durables continues, despite the threat of increasing prices. Says Y V Verma, chief operating officer, LG Electronics, the largest consumer durables’ manufacturer, “Demand shows no signs of easing. Consumers want the best in class.”

Says Purnendu Kumar, associate vice-president, Technopak, “The rate of replacement of consumer durables has come up dramatically in the past few years. This, in turn, is fuelling the demand we now see for these products.”

Ceama has projected overall industry growth in 2011 to be over 15 per cent. This growth, says the body, will be led by premium products. Signs were visible during the festive period this year. According to Amitabh Tiwari, national sales head, LG Electronics, the growth of flat panel TVs was closer to 110 per cent during the festive season, way above the projected mark of 75 per cent. Frost-free refrigerators, another rage with consumers, grew by 50 per cent, above the projected 35 per cent, while automatic washing machines (both front-loading and top-loading put together) grew by 45 per cent.

This uptrading and demand for products saw firms register 40 per cent growth this festive season, double the amount achieved in 2009.

This could grow in the new year, as consumers yearn for bigger and better products. Higher disposable incomes and the need to be at the forefront of technology is what is driving this phenomenon, says K Sriram, vice-president, sales, marketing and service, Onida. Agrees Ravinder Zutshi, deputy managing director, Samsung India, “There is no denying that consumers want the best. Whether it is superior products, after-sales service, all of this is becoming crucial when taking the final call.”

Companies are investing heavily in ramping up both distribution and production to take advantage of this boom. According to industry estimates, the investment in increasing production capacity alone will be closer to Rs 5,000 crore in the next few years.