Consumers planning to buy air conditioners (ACs), air coolers, refrigerators, or washing machines this summer may have to pay more, as appliance makers prepare to raise prices by up to 10% amid surging input costs driven by the US-Israel-Iran war.
While LG Electronics and Hitachi have already raised AC prices by 5-7% in the March quarter, Godrej Enterprises is planning price hikes of 6% to 10% across categories from April, as rising input costs, freight rates, and supply disruptions continue to put pressure on margins, Kamal Nandi, business head (appliances) at Godrej Enterprises Group, told Mint.
“Largely, the prices are going up due to the shortage in key raw materials like plastic, which are dependent on crude oil, rupee weakening and shortages in liquified petroleum gas (LPG) and piped natural gas (PNG).”
Intex Technologies expects to raise AC prices by around 4-5% and washing machines by about 5-6%, even as it tries to absorb a significant portion of the cost escalation internally to limit the impact on consumers, Keshav Bansal, director at the appliance maker, said.
Hisense India is closely monitoring the evolving situation and may consider price hikes of 7-10% in the second week of April, depending on how demand trends and competitive responses unfold, according to chief executive Pankaj Rana.
The war-led disruption comes at the start of the crucial summer season, when demand for cooling appliances peaks, forcing companies to balance margin protection with sustaining sales.
“We are seeing simultaneous cost increases across plastics, metals and packaging, which is very unusual and is putting pressure across all product categories at once,” Bansal said.
While prices typically rise ahead of the season, the increase is far more pronounced this year, creating a dual challenge of rising costs and uncertain consumer demand.
Madhur Singhal, managing partner (consumer and internet) at consultancy Praxis Global Alliance, said companies are likely to take upfront price increases rather than staggered hikes through the season. “We do not expect more price increases during the season. Instead, brands will increase MRPs by a higher amount right away and alter trade and consumer discounts depending on how the demand behaves,” he said.
Input price shock
The primary trigger for price hikes is a steep rise in raw material costs, much of it linked to crude oil and global commodity market disruptions.
Polypropylene—a petrochemical derived from crude oil used in washing machines—has risen by about 14% in the past month alone, according to Intex’s Bansal. Aluminium, widely used in motors, has become 6-7% more expensive, while costs of packaging materials such as thermocol and cartons have surged by 30-50% across industries.
Bansal added that even component-level costs are rising in tandem, with motors—comprising a high share of aluminium and copper—becoming more expensive, compounding the overall increase in manufacturing costs.
ACs, a key summer category, are facing multiple cost pressures. Plastics such as polypropylene and acrylonitrile butadiene styrene have become more expensive due to their linkage to crude oil, while copper prices—already elevated—have risen further amid geopolitical tensions, following sharp year-on-year increases.
There are also operational disruptions. LPG, used in brazing and coating processes during AC manufacturing as well as for making compressors, is in short supply, with manufacturers struggling to maintain plant operations and facing uncertainty around supply, executives noted.
Godrej Enterprise’s Nandi added that the impact extends beyond raw materials, with ocean freight rates rising up to three times and input costs for imported components increasing due to currency pressures, while shortages in iron ore, coking coal, oil and gas are also pushing up steel prices.
Balancing act
Despite the sharp increase in costs, appliance makers are attempting to partially cushion the impact on consumers by absorbing a portion of the input cost escalation.
Companies are leaning on financing schemes such as zero-interest EMIs to maintain affordability, with a significant share of purchases already made on instalment plans. At the same time, manufacturers are recalibrating operations to manage disruptions.
Nandi said Godrej is closely monitoring the situation, working with suppliers and optimizing procurement strategies to minimize disruption and ensure production continuity ahead of the peak summer season.
Demand, however, is expected to diverge across segments. Premium categories are likely to remain resilient and drive growth, even as entry-level segments face pressure from weaker consumer sentiment.
Nandi said premium segments are expected to outperform, while mass segments could see softer demand.
Praxis Global Alliance’s Singhal added that while cooling demand itself is unlikely to be deferred, consumer behaviour is expected to shift. “Summer heat will not delay buying of ACs and coolers, but consumers might trade down in terms of brands and specifications to manage their spend,” he noted, adding that entry-level and mid-market segments are likely to be the most impacted while premium buyers remain relatively insulated.