Heatwave Sparks 40% Surge in Air-Conditioner Sales in India

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Record Heatwaves Drive Unprecedented Surge in Air-Conditioner Sales Across India

Team finance Saathi

07/Jun/2024

Key Points:

Heatwave Drives Demand: Record-breaking temperatures push air-conditioner sales to new heights, with an expected 30-40% surge in summer sales.
Energy-Efficient Models: Availability of energy-efficient air-conditioners catering to various income brackets is boosting market growth.
Indigenous Manufacturing: Substantial investments in indigenous manufacturing under the PLI scheme are critical to meeting the escalating demand.

As India's summer heats up, the demand for air-conditioners has skyrocketed, driven by record-breaking heatwaves and soaring temperatures. According to the Consumer Electronics and Appliances Manufacturers Association (CEAMA), the annual sale of air-conditioners is projected to hit around 14 million units this year. This surge in demand underscores the increasing necessity of air-conditioners in urban households, where rising temperatures have rendered them a "quintessential requirement."

Heatwave Drives Demand

CEAMA President, Mr. Sunil Vachani, highlighted the remarkable sales figures for air-conditioners in May, predicting a 30% to 40% surge in volume growth during the summer months alone. The current heatwave, with temperatures surpassing 45 degrees Celsius in several regions, including Delhi-NCR, has significantly contributed to this trend. Such extreme weather conditions have made cooling appliances indispensable for maintaining comfort and safety in homes and workplaces.

Energy-Efficient Models Boost Market Growth

The Indian air-conditioner market is rapidly evolving due to the availability of energy-efficient models that cater to various income brackets. Manufacturers are investing heavily in developing advanced, energy-efficient air-conditioning units that not only provide relief from the sweltering heat but also align with the growing consumer preference for environmentally friendly and cost-effective solutions. This trend is particularly important as consumers become more conscious of their energy consumption and its impact on the environment.

Indigenous Manufacturing Under PLI Scheme

One of the pivotal factors in meeting the escalating demand for air-conditioners is the establishment of indigenous manufacturing units for components under the Production Linked Incentive (PLI) scheme. This initiative has encouraged significant investments from companies in local manufacturing, which is essential for maintaining supply chains and ensuring the availability of popular models. The PLI scheme aims to boost domestic production capabilities, reduce dependency on imports, and enhance the overall competitiveness of the Indian manufacturing sector.

Challenges and Industry Responses

Despite the surge in demand, appliance manufacturers such as Voltas, LG, and Haier have faced challenges, including installation delays and the need to replenish inventories of popular energy-efficient models. These hurdles have been particularly evident during the peak sales period in May, where companies reported a twofold growth in volume sales year-on-year. The robust demand has tested the industry's capacity to deliver and install units promptly, highlighting the need for efficient supply chain management and customer service.

Mr. NS Satish, President of Haier Appliances India, emphasized the consistent demand for efficient and high-quality air conditioning, especially during extreme summer temperatures. Based on trends from the previous year and current consumer behavior, Haier anticipates a substantial increase in sales for cooling appliances this summer. The company projects a 103% increase in AC sales and a 30% increase in refrigerator sales from March to May compared to the previous year. These figures reflect the heightened demand for cooling solutions as consumers seek to mitigate the effects of the relentless heat.

Conclusion

The unprecedented heatwave has not only highlighted the critical need for air-conditioners in Indian households but has also driven significant growth in the market. The availability of energy-efficient models and substantial investments in indigenous manufacturing under the PLI scheme are key factors contributing to this surge. As temperatures continue to rise, the air-conditioner market in India is expected to expand further, underscoring the importance of innovation, efficiency, and local production in meeting the evolving needs of consumers.

In summary, the current heatwave has profoundly impacted the air-conditioner market in India, pushing sales to record levels and emphasizing the importance of energy-efficient models and indigenous manufacturing. The industry's response to these challenges and opportunities will shape the future of cooling solutions in the country, ensuring comfort and safety for millions of households amid rising temperatures.

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