Air conditioner manufacturers are facing multiple challenges amidst waning pent-up demand. They are now caught between sustaining margins and market share expansion. To achieve one, they may have to sacrifice the other.
As they are entering the last quarter, AC manufacturers are now realising that the volume growth is hard to come by and their sales growth is mainly due to inflation. AC makers (like many other consumer durable manufacturers) are in catch 22 kind of situation where cost inflation is going up day by day and passing on the increased cost through price hikes may result in demand slow down. On the other hand, if they decided to absorb the cost inflation it may come at the cost of their margins.
Festive season is over so is the pent-up demand. However, competition intensity is increasing as everyone is aiming to increase market share. For example, Samsung has been fairly aggressive with new product offerings as well as pricing. In the process, it has likely gained market share as well as limited other manufacturers’ scope to take price hikes.
However, Voltas still continues to be the bestselling brand. Though Lloyd has priced below Voltas for similar offerings but has not been able to dent Voltas’ market share. Blue Star is as expensive as Daikin, while Hitachi has been aggressive with its pricing strategy. Clearly, companies are currently focused on liquidating inventory.
Meanwhile, channel filling has slowed down due to fear of possible third wave in the wake of emergence of Omicron which may eventually lead to lockdown kind of restrictions. Though most of the AC makers are planning for another price hike in January feedback from distributors and dealers is deterring them. Presently, everyone is hoping for softening of raw material prices, especially that of copper.