AC makers expect high double digit jump in sales in 2018

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

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

Although, cost of ACs has gone up by 10 to 15 per cent 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 per cent of the total sales.

"While the change of energy efficiency tables has made the cost of acquiring an AC dearer. However, the forecast of a hot, tropical summer, low penetration of ACs in India coupled with an increase in purchasing power of the consumers would propel the category," Voltas MD & CEO Pradeep Bakshi told PTI.

Moreover, adoption of inverter AC has increased in the last couple of years owing to improvement in consumer's 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 per cent of overall AC sales," Bakshi added.

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

The penetration of ACs in India stands at around 4 per cent, while in China it is 60 per cent, 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 & 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 work place and are now more used for it," he said.

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

On expected growth rate, Jawa said: "I expect that this industry to grow anywhere between 15 to 18 per cent on the residential side. Daikin is aiming to clock 25 per cent growth this fiscal because we are growing more than the market from last 8 years."