Sweating India at last brings cheers to RAC makers

Sweating India at last brings cheers to RAC makers

Consumers this year unlike in 2018, are opting for lower priced products i.e. fixed speed RACs instead of high-end inverters. It’s also revealed that room AC sales are not impacted by the on-going NBFC crisis and consumer financing this season has gone up from 35% last year to 45%

Till the end of May, summer 2019 on pan India basis was slightly cooler than previous two years. However, June has changed all that bringing cheers once again to the room AC makers. Mercury levels are now rising in North driven by a heat wave which is expected to sustain over the next few days in June. This will result in a hotter summer in 2019 vs. 2018 and 2017.

According to our survey, this season the RAC may see a healthy growth which may be in the region of 20%. However, there is a slight change in the consumer’s preferences this year which has thrown calculations of some of the AC makers’ haywire. Consumers this year unlike in 2018, are opting for lower priced products i.e. fixed speed RACs instead of high-end inverters. It’s also revealed that room AC sales are not impacted by the on-going NBFC crisis and consumer financing this season has gone up from 35% last year to 45%. Another interesting aspect of this season’s demand is that tier 2,3,4 and 5 cities are growing faster than Tier 1 cities and metros due to increasing affordability coupled with lower penetration.

Due to improved demand discounts have disappeared which is also the case with air coolers. However, prices have remained stable with AC makers preferring not to hike prices towards the end of the season. Also, unlike last year, inventory level has come down drastically which is also a good news for the manufacturers.

Different AC makers have adopted different strategies in the new season. For example, Voltas is focusing on expanding distribution network, Daikin is concentrating on tier 3&4 cities for growth. LG is focusing on 5 star inverter RAC range and has gone for selective price cuts in the premium range. Blue Star is giving greater push to North Indian market to increase its presence. Hitachi, on the other hand, is focusing on premium energy efficient ACs with self-cleaning feature.

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