Economy

By March, consumers can expect price hikes and less choices on retail shelves

Meenakshi Verma Ambwani New Delhi | Updated on February 21, 2020 Published on February 21, 2020

Consumers will need to brace themselves for price hikes and may see fewer choices on the retail shelves in terms of models for certain appliance products in the coming months.

As Indian consumer durable makers grapple with supply chain disruptions due to the novel coronavirus outbreak, an immediate impact is likely to be more evident in segments such as as air-conditioners and LED TVs by next month.

Sources said that overall durable industry is bracing for production cuts in the range of 20-40 per cent. While industry players said on an average a price hike of 3-5 per cent across appliances is inevitable, certain players on conditions of anonymity said that price hikes on ACs could be as high as 6-7 per cent during the peak summer months, if the issues in China persists.

Santosh Salian, Product Group Head-Air Conditioners, Godrej Appliances, said, “The March-April period is critical for the air-conditioners segment. With the current situation, customers may begin seeing shortages on the retail shelves for certain models of ACs by mid-March. In fact, consumers, who may still be undecided about their AC purchases, should go ahead and make the purchases for the summer season.”

“In addition, the industry on an average is expected to hike prices of ACs by 3-5 per cent. This is due to the hike in custom duty on certain critical components used to make ACs as well as the increase in ocean freight charges due to the challenging situations for shipments arising out of the outbreak,” Salian added.

Companies are trying to look at measures to tide over the component situation which may differ from each company’s inventory and supply chain management strategy. Kanwaljeet Jawa, CEO & Managing Director of Daikin India, said, “Price hike of about 3-5 per cent will happen due to the ongoing macro-economic and currency exchange conditions. We, however, are hopeful of supporting our aim for double-digit growth this summer season through sourcing of components from alternate markets.”

Manish Sharma, President & CEO, Panasonic India, and Chairperson for Electronics Manufacturing Committee, Ficci, added, “To meet the demand, we may need to airlift components from China in the near future as the sea route will further delay production.”

While some factories have resumed production in China, it may take longer than anticipated for full scale production and shipments to resume. Eric Braganza, President, Haier India, said: “Shortage of components is being anticipated by third-week of March, if the situation persists. The industry will require government’s support for quicker clearances at customs for shipments coming in from China.”

Already input prices for many critical components for appliances across the sectors have gone up dramatically. Avneet Singh Marwah, CEO, SPPL, brand licensee for Thomson and Kodak TVs in India, said that prices of open cell panels prices have spiked by 20 per cent and a further increase in March is more likely. He said industry could hike prices for smaller sizes of TVs by 10 per cent and it could be even higher for large-size TVs.

Published on February 21, 2020
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