Japanese AC makers turn the heat on Indian brands

Japanese air conditioner (AC) manufacturer Daikin plans to have dealers in all Indian cities with at least 100,000 population. This is part of the company's strategy to increase its share in the Indian market from 12 per cent to 20 per cent by 2015.

"We want to tap all segments, not just the top segment of the market. We have already launched products targeting each segment. And now it is time for us to penetrate the rural and semi-urban cities of India," said Kanwal Jeet Jawa, managing director, Daikin Air-conditioning India Pvt Ltd.

However, Daikin's products - the company focuses on the HVAC (heating, ventilation, and air conditioning) segment - would be priced about 5-10 per cent higher than that of others.

Not only Daikin, which claims the No 1 position in the global air-conditioning market, other Japanese AC makers such as Panasonic and Hitachi have also made a strong inroad into the bulging AC market in India over the past couple of years.

According to industry sources, both Panasonic and Hitachi have maintained a steady growth in the AC market at the start of the summer this season. Cumulatively, they would have more than 15 per cent of the market till February 2013, sources added.

According to the top executive with a Japanese company, Japanese AC makers have been growing at about 15-20 per cent per annum.

"Being a relatively new entrant, Panasonic is growing at 80-100 per cent in split AC segment. In 2008, our market share percentage for ACs was less than 1 per cent and we are at about 15 per cent on Saturday. We plan to invest Rs 120 crore in FY13 in the spilt air-conditioner segment with the aim to capture around 20 per cent of the market share by the end of this fiscal," said Manish Sharma, MD, Panasonic India.

According to the study by an independent market research agency, South Korean consumer durable majors such as Samsung and LG have lost their share substantially in the past year. This was partly because of the fact last year, companies such as Samsung decided to get out of the window AC, a segment which is not growing any more.

According to the study, the market share of LG had dropped to 17.3 per cent in February 2013 from 26.3 per cent in March 2011.

Samsung's market share, too, dipped to 11.3 per cent in February 2013, from 19.5 per cent in March 2011.

The share of home-grown Voltas increased to 18.3 per cent in February 2013 from 17.5 per cent in March 2011.

However, the room AC market have declined by about 5 per cent in 2012. "Though there were negative sentiments in the market last year, our turnover has gone up to Rs 1,800 crore," said Jawa of Daikin.

Meanwhile, most of the companies are either cutting down window ACs, or have stopped making them altogether.

Panasonic, for instance, has stopped making window ACs, while Samsung, Whirlpool, and Carrier Midea India have cut down production of window Acs.

According to industry estimates, the share of the window ACs has come down from about 30 per cent in 2010 to 20 per cent in 2012, and it is likely to drop further this year.

Indian AC market is estimated at more than Rs 7,500 crore a year, with sales of 3.2 million units annually.

Pradeep Bakshi, chief operating officer of Voltas Unitary Products Business Group, recently told Business Standard that the company would maintain a growth rate of 20 per cent year-on-year.