AC, refrigerator sales hit 5-year high in March, signal return of discretionary spending

KOLKATA: Sales of airconditioners and refrigerators rose the highest in five years in March according to just published data from market tracker Gfk, signalling the return of discretionary spending.
Manufacturers have attributed the spike to the early onset of summer and improved consumer sentiment that had taken a beating around Diwali, the traditional festival season when consumer appliances makers record brisk sales.

Leading airconditioner and refrigerator manufacturers Voltas, LG India, Godrej Appliances and Videocon have all seen high demand in April. Individual data on number of unit sales are yet to be published.

While airconditioner sales rose 59% in March with all top brands reporting record double-digit growth, refrigerator sales were up by more than 20%. Voltas saw the highest growth pace at around 70%, while for LG, airconditioner sales rose 55% in March-April, and 40% for refrigerators.

“April has also seen a similar tide of high sales like March, due to the marriage season and high temperature everywhere. Even constant pricing has helped consumer sentiment since the dollar weakened in March which postponed the requirement for any price hike at least till June,” said Godrej Appliances business head and executive vice president Kamal Nandi.

Rural markets threw up unprecedented growth for airconditioners and refrigerators, rising by up to 100%. Videocon’s chief operating officer CM Singh said growth more than doubled in the northern heartland, especially in rural Uttar Pradesh, Madhya Pradesh and Rajasthan.

“There was huge pent up demand whereby all our stock was completely sold out,” he said. Given the muted show until March, appliance makers did not anticipate a demand surge and were left with shortage of stocks especially airconditioners as demand picked up. The shortfall was met by expanding production, even running multiple shifts. As per estimates, March-June accounts for more than 60-70% of annual sales for air-conditioners and refrigerators.

This year brands are focused on high-priced inverter air-conditioners and refrigerators promising savings on electricity bill, which will drive the average selling price for the category. “We have put great effort in innovating technology that helps save energy and reduce the burden of heavy power bills on the consumers,” said LG India’s marketing head Niladri Dutta.

According to a report from Euromonitor, the number of households buying split air-conditioners has doubled from 2.6% to 5.6% between 2010-2015 —the highest across all white goods.