AC prices may be hiked in the new season

AC prices may be hiked in the new season

According to some retailers and dealers, prices of air conditioners are likely to go up by 3-5% in the new season. It’s believed that the AC manufacturers have already raised the prices but the same may come into effect once the old stocks get cleared and new stocks come into the market.

Strangely, this time it’s taking much longer for the stocks to get cleared as the retailers had resorted to pre-buying of inventories in anticipation of stock-out due to COVID-19 outbreak. According to the reports available to us, compared to average inventory levels of 30 days, some of the modern retail chains have stocked up inventory of above 60 days also. As a result, brands have seen unprecedented primary sales in February 2020.

Meanwhile, the COVID-19 outbreak in China has not disrupted the supply side so far due to 60-85 days total inventory across the trade channel of manufacturers, wholesalers, distributors and retailers put together. Operations in China have resumed with factories currently operating at 60%-70% production level, which is expected to improve further as things return to normalcy. Hence, inventory at the OEMs will get replenished as the production picks up in China.

Meanwhile, our survey indicate that COVID-19 didn’t impact much of the AC sales during January and February as the pandemic then was mainly limited to China. Sales have maintained the growth rate of first 9 months average growth rate during the first two months in the current calendar year. However, in March saes has not picked up due to extended cool weather in the early part of the month and COVID-19 effect thereafter.

Considering the rising number of Coronavirus cases and precautionary measures such as restriction on mass gathering, temporary shut-down of public places like malls, cinema halls etc., if the fear factor among the consumes rises, it may impact sales going ahead.

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