Air Conditioners get costlier, sales by value to rise 10-15%

Air conditioner sales by value are expected to grow 10 to 15 per cent in 2014/2015 despite delayed summers and flat volumes. The average selling price of ACs has gone up this season because of higher input costs and change in the mix of products sold, manufacturers say.

"Most companies have increased prices this year. Year-over year, our prices have gone up five to10 per cent," Krishan Sachdev, Managing Director of Carrier Midea India said. Even though most companies manufacture or assemble ACs in India, critical components are imported - the rupee had weakened against the dollar earlier this year (26.7 per cent in the past three years in fact), making imports more expensive. On the other hand, companies have started pushing more energy efficient and new technology products such as inverter ACs, which are more expensive.

"Sales in April were very good and May looks good so far. But a lot depends on the monsoons from now on," Sachdev said.  

The market for split air conditioners had slumped by as much as 20 per cent in June last year as Indians stopped buying ACs with the monsoon setting in early. Manufacturers accumulated inventory and ended up controlling production to manage the glut. The first quarter ending June - peak summer months -- is critical for AC manufacturers since it contributes to as much as 30 per cent of annual air conditioner sales.

Managing Director of Japanese consumer electronics company Panasonic Manish Sharma said that the AC market will grow about 15 per cent this year driven by average selling prices rises. However, volumes will not grow because of changing consumer buying behavior. Their disposable income may be going more towards fancy mobile handset replacements than buying ACs.