Soaring mercury triggers ‘golden age’ for AC manufacturers

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If the temperature rises, can the sale of “the cool” device be far behind? The scalding summer has triggered a doubling of AC sales in May, the only restraining factor being the quick depletion of stocks to zero and the inability of companies to replenish inventories and install machines at the homes and office of buyers.

With the thermometer routinely racing above 45 degrees Celsius at many places including Delhi-NCR, common people are queuing up at dealers only to be told that there is a waiting period. AC majors are describing this period as the “golden period” in their industry.

All leading brands such as Voltas, LG, Daikin, Panasonic, and Blue Star have recorded a sharp rise in sales in May.

Industry executives expect 30-35% growth this year compared to what they achieved last year.

Voltas recorded a 100% rise in the sales of home ACs in May. Its managing director and chief executive officer Pradeep Bakshi hopes that the rise in sales would continue in June too. “As we reflect on May 2024, Voltas has a remarkable surge in sales, showcasing a stupendous volume growth of 100 per cent compared to the same period last year. This milestone is particularly significant as May historically stands as one of the highest contributing months in the AC and cooling products industry,” the Voltas chief told the media.

A firm of the Tata group, Voltas sold a record 20 lakh AC machines in FY24, the highest by any company so far. But this year, it hopes to surpass that figure in the first six months of this calendar year.

LG Electronics India senior VP Sanjay Chitkara also spoke about surging sales. “This year created many sales records starting from the south region and now North India. We are expecting a minimum 100 per cent growth in north India. Similar growth trends are expected to be seen in eastern states also,” remarked Chitkara.

This Korean giant also registered a growth that has “surpassed the last 5 years’ records with a multi-fold surge in demand”.

Fortunes kept shining for Bue Star during the entire quarter, as indeed for almost all brands. Its managing director B Thiagarajan said, “In April the demand went skyrocketing. Then we thought that it would slow down in May but it did not because of sales from the northern region. Installation delays are happening and the service calls are unprecedented. This is because of heat and the industry was never prepared for such kind of growth.”

Daikin India Chairman and Managing Director Kanwaljeet Jawa said: “The challenge in the market is how many units you can produce and supply. That’s the absolute challenge.”

Sales of the Japanese brand Daikin shot up 60-70% higher compared to FY24. It could post 35-40% growth in revenues in Q1 (April-June) of FY25.

“Exponential” growth was also on the lips of the business head for Panasonic Life Solutions. “In the month of May we recorded the highest-ever 52% increase in sales compared to last year,” said Abhishek Verma, Panasonic Life Solutions India Business Head, Air Conditioners Group. Verma revealed that 5-star inverter ACs accounted for 55% of its online AC sales.

Business heads, however, held out a warning – that of price rise. The price of copper, an essential ingredient for AC machines has undergone a price hike globally and it could quickly spill over to Indian markets.

Moreover, there was a caution for the AC industry too. The tone of the party may sober down in June with the rains forecast to set in according to schedule.