AC Sales Slow in April Due to Rain, 5% Price Hike Expected

New Delhi, Apr 13 (PTI) Intermittent rainfall in south India and recent thunderstorms with moderate rain in some parts of north and eastern regions have slowed down the pace of sales of room air conditioners in April, but the industry is still expecting a double-digit growth with recent weather forecasts suggesting an intense summer.

Manufacturers of room air conditioners (RAC), including Blue Star, Samsung, and Haier, are also going for a price increase of up to 5 per cent in April, extending the impact on raw material costs and currency exchange fluctuations amidst macroeconomic volatility.

Besides, the room AC industry is still dependent on imports of crucial components such as compressors, PCBs, and fan motors, mainly from China, and is anxiously looking at the tariff standoff triggered by the Trump administration.

Despite such odds, the RAC industry expects a double-digit growth in the June quarter, the season contributing a large chunk for sales of compressor-based cooling products, over the high base achieved last year, when it had reported around 35 per cent growth.

Godrej Appliances Business Head & Executive Vice President Kamal Nandi said there is a mixed weather impact on sales of RAC so far.

"If you look at the southern market, intermittent rainfall is happening. However, the temperatures in the north, west and east have picked up. Roughly 23 per cent of the market, which is the southern region, has not picked up yet. This is certainly going to impact the overall sales of air conditioners for sure," Nandi told PTI.

"April will be a challenge for sales. It will pick up in May and June as temperature has started rising," he said, adding that Godrej Appliances expects a high-digit growth of 50 per cent in the June quarter.

In the current season, the number of sales and enquiries for heavy-duty air conditioners with high tonnage capacity and copper condensers guaranteeing improved longevity and heat transfer are on the rise.

RAC units with higher energy efficiency and heavy duty are in demand as customers are also looking for powerful cooling solutions for extreme temperatures in summers like last year, besides saving on electricity costs while purchasing.

"Now people have started to focus on cooling capacity instead of tonnage," said Hair India President N Satish.

Heavy-duty RAC has a price difference of Rs 2,500-3,000 with a normal unit.

Haier India is also going for a price increase of RAC by 4-5 per cent from April 15, said Satish.

"This overall increase is because of the impact of escalation of raw material costs and currency exchange fluctuations," he said.

On the sales, Satish said so far in April, it is lower than last year but added that sales will pick up by the end of the month.

"There will be a 10-15 per cent growth in April year-on-year," he said, adding, "This year season would be good."

Blue Star Managing Director B Thiagarajan said, "We have already increased prices up to 5 per cent because of the raw material and exchange rate. We were the first one to do so."

Costs of raw materials, such as copper, steel, aluminium and refrigerant gases, are on the rise. At the same time, the dollar vs rupee exchange rate has been volatile, he said.

Expressing similar views, Samsung India Vice President of Digital Appliances Business Ghufran Alam said considering the higher raw material inputs cost and currency fluctuations, the company is considering up to 3 per cent growth.

Godrej Appliances Nandi has ruled out any immediate price hike; however, it is keeping an eye on the development as metals such as copper are fluctuating very severely, and with the new tariff policy announced by the Trump administration, steel prices are also going up.

"Material for the June quarter has already been brought out. So the impact of any changes in commodity or currency exchange will come to Q2 onwards," he said, adding, "I do not think market prices will move up so much right now and any changes in price."

Asked about any possible impact on the RAC market due to the ongoing tariff war between the US administration and China, a leading supplier of components as compressors, PVC, etc, for cooling products, Thiagarajan said not immediately.

"It is a highly volatile situation. We do not know how the price will go. My worry is not about the prices or the input cost but how the global economy and the Indian market will be," he added.

Thiagarajan said he expects a double-digit growth of 20-25 per cent.

The Indian room air-conditioner market is one of the fastest-growing markets globally, in which over 12-15 companies compete. The market is estimated to be around 15 million units.