AC prices surge 6-8% on scorching demand

NEW DELHI: The searing heat has fired up AC sales. The unprecedented demand this summer season – following record high temperatures across many parts of the country – has also meant supply shortage and scarcity of critical on-ground manpower, all of which have seen prices shooting up 6-8% in June due to costlier inputs.
Summer this year has been torturous and demand at record high, say executives at some of the top companies such as Voltas, LG and Llyod.This has meant that supplies – both of fully-built products as well as components – are short.

Industry officials say that the demand surge has taken the industry – and even the supply chain – by surprise, leading to shortages. “There is short supply of even the manpower on the ground for installation and service. Costs have gone up here too. Many companies are also shifting their stocks from south India – where temperatures are getting better – to the north where heat still remains strong,” an official said.
The strong demand is now becoming a dampener for the heat-harried consumers as prices have gone up. “The input costs have gone up from all angles, and we had no option but to raise prices,” a top official with a leading company said. “At the higher scale, the prices have increased by 6-8%, while some companies, which still have stock in the market, are trying to absorb the costs to some extent to keep the momentum going.”
“This year has been a golden year for the AC industry. We are very bullish on sales even in the month of June as temperatures are still very high across many states. We are witnessing exceptional growth,” said Sanjay Chitkara, senior VP at LG Electronics India.
Sunil Vachani, president of Consumer Electronics and Appliances Manufacturers Association (CEAMA), said the industry is expected to grow by 30-40% this year. “We expect sales at 15 million units in 2024, against the around 11.5 million units that we did last year.”
On shortages and pressures on costs, Vachani said that freight and commodity prices are up. “Hopefully, the industry will be better prepared next year. These types of temperatures are likely to continue, with global warming being a grim reality.”
Voltas, one of the top players in the AC category, said it has been able to manage the stocks on better preparation ahead of the season. “Our supplier base and ancillary base is very strong… (this) has helped us achieve significant growth over the last six months,” Pradeep Bakshi, MD & CEO of Voltas, said.
Bakshi said the company’s recent investments in expanding greenfield and brownfield capacities for key product categories like ACs and commercial refrigerators are on track. It will add one million unit capacity in Tamil Nadu for ACs and 2.5 lakh units for commercial refrigeration in Gujarat. “We have already made significant investments in capital expenditure across our facilities in Gujarat and Tamil Nadu. Moving forward, we are well poised for a 3-million supply capacity for ACs.”
Alok Tickoo, executive VP at Havells-owned Lloyd, said it is investing a fresh Rs 50-60 crore for expanding its AC manufacturing capacity at Ghiloth in Rajasthan and Sricity in Andhra Pradesh.