The Hindu Business Line : Durables industry upbeat on AC sales

YET again this summer has seen players such as LG, Samsung, Whirlpool, Electrolux, and Voltas all competing with each other for their share in the air-conditioners (AC) market. The players are hoping to close calendar 2004 with a sale of 1.25 million units, up from 0.95 million units sold in 2003.

"Despite being a late entrant in the consumer durables market with penetration level of less than 1 per cent, the category has been experiencing growth of 20 per cent during the last three-four years. Much better than other durable products such as refrigerators," industry sources revealed.

Which region of the country sees maximum sales?

According to an ICRA Sector Analysis on Consumer Durables (April 2004), "By geographical regions, North India has accounted for the greatest proportion of room air conditioner (RAC) sales, followed by the Western region." While the North accounted for 36.9 per cent of RAC sales during 2002, the West accounted for 30 per cent.

"This skew towards the North could be attributed to higher temperatures and relatively higher affordability levels, especially in Punjab, Haryana and Delhi. The southern region clocked a sale of 24.1 per cent and eastern region 8.9 per cent of sales during 2002," the report said.

Among the States, Delhi accounted for the largest share for all ACs with 32 per cent of the country's market.

The other States, in order of market size, are Maharashtra, Tamil Nadu, Punjab and Andhra Pradesh.

According to the report, the household segment dominates the RAC category. It accounted for 56.5 per cent of the total demand during 2002.

The commercial segment, comprising offices and business establishments accounted for 43.5 per cent of the total RAC sale in 2002.

"As is to be expected, the household segment dominates demand for window ACs with 64 per cent sales in the segment in 2002. However, for split ACs the household segment accounted for only 36 per cent. The commercial segment has growing presence in the RAC market due to increased demand from sectors such as banking, and restaurants," the report said.

According to industry players the demand has followed a similar trend in 2003.

Elaborating on the capacity that has maximum consumer demand, the report states, "Traditionally 1.5 tonne capacity models have accounted for bulk of the demand for RACs in Indian households, since the size has been found to be optimal. In 1995, 1.5 tonne models accounted for 80 per cent of the domestic demand for RACs. However, the figure came down to 70 per cent in 1998 and is likely to have further dropped in 2002, with demand for higher capacity split models (3-4 tonnes) picking up. However, in the window AC segment, as of 2002, the 1.5 tonne still accounted for around 75-78 per cent of the total market."

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