HomeIndustry TrendsAll out efforts by AC makers to push their products

All out efforts by AC makers to push their products

Sales during three months in summer (April-June) and two months in festive season (September-October) almost determine the performance of Air Conditioner manufacturers’ for the whole year. While this year’s summer performance was impacted due to unseasonal rains, especially in the Northern part of the country, AC manufacturers hoped that lull of the summer would be more than compensated by pre-festive season sales. We are already halfway through our festive season and nothing eyebrow raising sales has happened till now. According to AC dealers, this year’s Dussehra sales were similar to last year’s sales and there was nothing spectacular in it. It should be noted that price of ACs along with some other white goods had to be hiked by 5-10% recently as the government increased import duties on them to discourage their imports.

With Diwali coming, discounts are back!

Unlike last year, this year Diwali is in November and AC manufacturers have more days to sell ACs (and other consumer durables) in post Monsoon and pre-Diwali season which may help them to turn out better sales performance. And manufacturers are offering higher discount this time than before to register more sales. Various financing options are available from Bajaj and instant cashback offers from Axis bank, ICICI, Citi and HDFC are available. There is intense competition too in the market and consumers are once again proved to be supreme. According to dealers, Daikin, Hitachi and LG are the most popular brands among the consumers.

Apart from discounts, manufacturers are also providing many other incentives. Almost all brands are providing free installation with the exception of O-General and Mitsubishi. Further, one year entire machine warranty and 5-10-year compressor warranty is common across all brands. And Hitachi is going one step further by offering additional 5-year warranty on PCB (circuit board).

Competition is intensifying

AC manufacturers are also facing competition from some MBOs (Multi Brand Outlets), some of whom have their own in-house brands. One MBO (with deep pockets) has priced its room air conditioner price lowest compared to all other brands and it is giving headache to the leading manufacturers. Interestingly, prices of BlueStar’s  products are at a premium vis-s-vis brands like Hitachi, Voltas, Daikin and LG. It is also learnt that one of the leading multi brand outlet offering 12-15% discount on Hitachi ACs.

Indian customers are still preferring air conditioners and don’t look at air coolers favourably. Some markets like, Mumbai, air conditioners provide better performance than air coolers, and therefore, it is very difficult to push air coolers in such markets. Even in other markets, ACs are preferred over coolers even if the installation is for smaller place.

AC market has many players

Unlike Chinese market, Indian room AC market with size of 5.5 million units annually, has 10-12 leading players thus offering Indian consumers wide range of choice. China, despite being the largest room AC market in world, has only 3-4 major players. Experts are of the opinion that Indian AC market too will follow the Chinese footsteps in terms of growth. Chinese AC market saw a rapid growth during 10 years period from 1991 to 2001 when market grew 10 times. Post 2001, till now, the Chinese market has grown less rapidly at six times. Like Chinese market, Indian market is also expected to enter the phase of rapid growth followed by a phase of consolidation.

Voltas market leader

Voltas is the market leader in India with largest market share and analysts believe that there is no threat to its leadership position, at least in next few years. Backed by strong brand name, Voltas’ aggressive marketing campaign over the years  has enabled the company to enhance its brand value and also keep its leadership position in tact despite having seen the entry of many overseas players.

However, it is believed that Japanese and Korean companies have an edge over Indian companies on the back of their strong technology and global presence. According to market observers, to sustain leadership position in the market continuous innovation and improved product offering will be necessary which in turn requires strong in-house R&D. By offering price discounts and other incentives one can gain market share in the short term but to sustain it in the long term it is the quality of the product and the service which are essential.

Take the case of Daikin. Daikin’s market share has improved in recent years mainly due to better perception of the brand in eye of the consumers and the company also is living up to these expectations with strong product quality and improved service.

Service is the key to success

Apart from product quality, service is another aspect which help to gain consumer confidence. This aspect has been highlighted by some of the foreign brands who not only concentrated on product quality but also on after-sales service. For example, brands like Daikin and LG are setting examples of good service offerings along with a good product and eventually are gaining market share. Similarly, erstwhile Lloyd’s entire success story was due to excellent service offering to customers. Hitachi, despite having strong product portfolio lacks in services and the company is reportedly making amends to its strategy in this regard. Though Voltas has the largest market share it lags far behind its competitors like Daikin, LG and Blue Star in offering services which may affect the company in the long term.

All said and done, despite seeing some normal hiccups here and there, Indian AC market is expected to see rapid growth in the coming years thanks mainly to fast paced urbanisation and growing income of the people. Also, global warming is a good news for AC manufacturers whose sales are increasing partly due to increasing temperature every year. Also improved power scenario (which is far better than it was a decade ago) and also increased efficiency level of the products offered are the other leading factors influencing the growth.

 

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