Buoyed by GST rejig, AC companies line up launches for summer sales

Old inventory in the channel is also moving fast, as consumers hope to lock in prices before the new BEE ratings set in

Air conditioner (AC) makers are lining up launches for the upcoming summer season, underlining the benefits of the good and service tax (GST) rate cuts announced earlier this year, which will ensure that prices of high energy-efficient ACs do not weigh on consumer pockets.

 

New Bureau of Energy Efficiency (BEE) star labelling norms are also set to be implemented from January 1 next year, pushing up the prices of ACs, though the GST cut will cushion the blow. In September, the government reduced the GST on ACs from 28 per cent to 18 per cent.

 

Haier, which launched a range of new Gravity AI Series ACs last week, expects to clock a 38 per cent growth in the coming year, on the back of strong sales.

 

Meanwhile, Bluestar has lined up new AC launches in the month of February, once the Union Budget is announced.

 

“The current 5-star rated products will be equivalent to 3-star in the new ratings. The 5-star rated products under the new norms will be equivalent to current 7-star rated products,” explained B Thiagarajan, managing director (MD) at Bluestar.

 

For companies, the new 5-star rated ACs would have been more expensive due to the increased use of copper, prices of which have surged massively in the last one year.

 

“The more energy efficient an AC is, the more copper it uses. It would have not been possible to absorb the increase in prices and we would have had to pass it onto the customer. Add to that the impact of the falling rupee against the dollar, and that would have been an almost 7-8 per cent addition to costs on the consumer wallet,” N S Satish, president at Haier Appliances, told Business Standard recently.

 

“If the government had not reduced the GST rates from 28 per cent to 18 per cent, the 5-star rated ACs would have been really expensive and almost unaffordable for a big section of the population. It has helped to not take the cost up,” he added.

 

“We will definitely clock a growth of 15 per cent next year, but to offset the slowdown we faced this year, we aim to grow by almost 30 per cent,” Thiagarajan added.

 

Old inventory in the channel currently is also moving fast as consumers hope to lock in prices before the new BEE ratings set in.

 

“Policy shifts like the GST rate cut and BEE star rating revision are accelerating demand, as trade partners and consumers move early to secure current pricing and mitigate the average expected increase of 7-8 per cent on new inventory, noting that actual changes may differ based on specifications and product categories,” pointed out Jayant Balan, senior business leader at Voltas.

 

“Our festive and winter season sales have grown in double digits, supported by proactive channel readiness, robust inventory, and a sharp increase in digital engagement. The GST cut has added further momentum, leading to higher walk-ins and stronger conversions,” he added.