From Godrej To Daikin: Appliance Makers Pin Hopes On 'Unusually Hot' Summer For Sales Boost
The El Nino phenomenon this year is associated with a higher number of heatwave days, the Met office says.
Consumer appliance makers are hopeful that a hotter-than-usual summer will spur sales this season after two disappointing years.
Companies, including Blue Star Ltd., Daikin Airconditioning India Pvt., Godrej Appliances Ltd. and BSH Home Appliances Ltd., are targeting a 20–25% rise in sales of refrigerators and air conditioners amid expectations of a strong demand.
Some, however, warn that the industry could face a slump in an election year if consumers postpone big-ticket purchases, such as those for refrigerators and air conditioners.
"We're anticipating a strong summer season this year, led by the northern markets, which were mainly impacted in 2023 due to erratic weather patterns," KJ Jawa, chairperson of Daikin Airconditioning, told NDTV Profit, projecting a year-on-year sales increase of 20%.
The India Meteorological Department has predicted that the summer months of March through May could be "unusually hot" across most parts of the country.
While El Nino conditions have weakened, they're still prevailing and are expected to continue till May. But unlike last summer, which turned out to be cooler amid unseasonal rain, the El Nino phenomenon this year is associated with a higher number of heatwave days, the Met office said.
On summer-specific sales, Blue Star Managing Director B. Thiagarajan expects a 25% year-on-year rise in the three months through June. For the full year ending March 2025, he expects to sell 13 lakh air-conditioner units.
"We expect to cross (the) 1-million mark this year, which is a jump of 25% from the previous year," Thiagarajan told NDTV Profit. "The volumes may further increase by 30% in 2024–25."
The confidence comes after Blue Star's air-conditioner sales, like Daikin, came in below projections last summer due to the El Nino effect.
While a lot will depend on the weather gods, there could be "some impact" on sales because of the upcoming general election, Thiagarajan said. "We remain watchful as political uncertainty can impact consumer confidence, as seen in the past."
Premium Segment
Summer sales contribute nearly a third to the Rs 1.5 lakh-crore industry, driven by air-conditioners and refrigerators. This year's projections take into account the potential impact of the elections. However, companies aren't bullish about entry-level products, a trend that has persisted for the past few quarters.
"The premium segment will continue to drive growth on the back of high disposable incomes, easy access to financing for homes and more first-time buyers," Kamal Nandi, business head at Godrej Appliances, said. "We don't see much growth coming from the mass segment."
Meanwhile, companies are ramping up capacity and launching new models to meet demand. Japan-based Daikin will roll out a new range of air conditioners later this week, Jawa said, refusing to divulge further details before its official launch.
Other companies are following suit. Blue Star has unveiled a new range of affordable room air conditioners. Godrej Appliances launched 'Eon Vogue Edition', a series of nature-inspired wood-finish refrigerators and air-conditioners.
BSH Home Appliances also introduced a range of single-door refrigerators earlier this month. "We're ramping up production and optimising the supply chain to take advantage of the likely great summer for cooling products," Chief Executive Officer Saif Khan said.
Khan sounded bullish on the company's prospects, challenges notwithstanding. "At BSH, we're poised for double-digit growth this year, capitalising on our diverse portfolio and hyperlocal approach," he said. "While challenges of uncertainty, inflation and external headwinds persist, resilient consumer sentiment, coupled with the government's efforts for economic stability, fuels our optimism."
Appliance makers are also pumping significant amounts of money into sporting events like the Indian Premier League to drive sales and win market share. Blue Star plans to spend Rs 40 crore during the summer out of its total marketing budget of Rs 65 crore. It expects to expand its market share to 15% by 2024–25, up from 13.75% now.
Higher Prices After June?
Companies have ruled out price hikes and are expected to take a call on the same only after June. "We had taken a hike in December and January each, so we don't need to increase prices, at least for now," Daikin's Jawa said. Blue Star and Godrej Appliances, too, echoed similar sentiments.
