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With pressures of raw material costs rising unabated, many consumer durable companies said they are looking to hike prices in the second quarter in a phased manner. This means consumer appliances such as refrigerators and washing machines will become costlier by 3-5 per cent in July and consumers may also need to brace for further price hikes.
Factors such as rising prices of metals like steel, copper and aluminium, hardening of crude oil prices as well as massive uptick in global freight costs are adding to the woes of the consumer durable companies at a time when they are grappling with the the brunt of the pandemic. Companies said that early signs of demand uptick are visible with lockdown-like restrictions being eased by State governments.
Commodity prices
Kamal Nandi, Business Head and Executive Vice-President, Godrej Appliances, said: “Commodity prices have risen by nearly 20-21 per cent but companies have only been able to take a price hike of about 12-13 per so far. So there is a still a gap of about 7-8 per cent. We are not seeing any signs of commodity prices softening and hence we will look at hiking prices in a phased manner over the three-month period of July, August and September as demand trends improve.”
LG India too indicated a phased hiking of prices. “Since the beginning of 2021 we have seen an increase in commodity prices, accordingly we had earlier aligned our product prices. Currently also we are seeing an upward trend in commodity prices and because of this we will be increasing prices in a phased manner,” said Deepak Bansal, Vice-President, Corporate Planning, LG India.
Most companies have already announced two-three rounds of price hike since December.
Manish Sharma, President and CEO, Panasonic India and South Asia, added that prices of ACs and refrigerators are scheduled to rise by 4-5 per cent in July. “However, with the kind of growth we have witnessed in the last few months, we are positive that the trajectory will remain steady and consistent. At an organisational level, we try and absorb maximum costs at our end and not pass it to our consumers,” he said.
Freight charges
Companies such as BSH Home Appliances have already hiked prices by 3-4 per cent in June. Neeraj Bahl, MD & CEO, BSH Home Appliances said, “Freight charges have increased by 12-14 per cent compared to normal rates and input costs have also gone up. If we were to pass this to the end-consumer (fully), the price hike would have been to the tune of approximately 20 per cent. However, we have hiked prices only to the tune of 3-4 per cent from June 15. We took a call to absorb some of this impact but what will be unbearable too will be passed on in a phased manner.”
With a washed-out summer season due to the pandemic, AC dealers are still saddled with a lot of inventory and hence, AC makers may be able to increase prices only in September. B Thiagarajan, Managing Director, Blue Star Ltd, said, “We have adequate inventory at present. Therefore, may not look at increasing prices for room ACs till August.”
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