Demand for inverter ACs picking up this summer

Consumers are upgrading to high-end inverter air-conditioners in the hope of halving their electricity bills this summer. With an average selling price of ₹30,000, inverter models are expected to expand the air-conditioner category to ₹14,000 crore this year.

Currently, inverter ACs (which lead to 50 per cent reduced electricity bills) comprises 8 per cent of the 4.7 million unit air-conditioner category.

Market leader, LG has already switched its complete manufacturing line into making inverter models.

“Inverter AC is a high value proposition as the average selling price is ₹30,000, which will push up the overall category size to ₹14,000 crore this year. LG, which has a market share of 19 per cent, has already shifted its entire product line to manufacturing 100 per cent inverter ACs as consumers are willing to pay more and save on 50 per cent of their electricity bill,’’ said Vijay Babu, Business Head, Air-conditioners, LG India.

LG is already providing free stabilisers worth ₹2,500 and a 10-year warranty for its compressors to invite more people into the inverter category. “The government is also pushing for energy efficiency with ISEER ratings and we expect our share to go up from 19 per cent to 37 per cent in the inverter segment,’’ added Babu.

Domestic AC companies like Godrej Appliances and Videocon are also optimistic about the future of the category as demand surges this summer. “Currently, the inverter segment is eight per cent of the total category but should double to almost 15-20 per per cent this year. In the last two months, AC sales have been fuelled by high temperatures and should go up even further in June before GST kicks in since prices would rise by three per cent,’’ observes Kamal Nandi, Business Head, Godrej Appliances.

In fact, there is already strong consumer demand this summer in the northern and western markets for air-conditioners. Sanjeev Bakshi, Category Head – AC, Videocon Industries, said, “We have already sold three lakh air-conditioners compared to 1,75,000 last year between January and April. Regional markets in the north and west have recorded the highest growth while peak summer demand has not been witnessed in the southern States due to intermittent rains.’’

After the summer demand for air-conditioners, the fear of price increase post GST is also expected to fuel demand for the category. “After demonetisation, consumers are now concerned about GST since there would be increased tax slabs from the current 24 per cent to 28 per cent. Consumers would prefer to buy their air-conditioners before June since prices might go up by four per cent after GST comes into effect in July,’’ added Bakshi.

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