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Home >News >India >Covid second wave: Ongoing lockdowns have hit air-conditioner sales, says report

Covid second wave: Ongoing lockdowns have hit air-conditioner sales, says report

Companies were prepared for a good season, given the forecast of a hot summer in parts of India as well as pent-up demand from a year-ago period. However, the current surge in covid cases has led to state-specific lockdowns that are seeing several non-essential stores shut across markets. (Bloomberg)Premium
Companies were prepared for a good season, given the forecast of a hot summer in parts of India as well as pent-up demand from a year-ago period. However, the current surge in covid cases has led to state-specific lockdowns that are seeing several non-essential stores shut across markets. (Bloomberg)

  • Over 70% of air-conditioner sales take place between January and June, and any disruption during this period results in a disproportionate impact on industry sales

NEW DELHI : The surge in covid cases seen in April will adversely impact sales of cooling appliances such as air-conditioners, coolers, and fans, a report by brokerage Motilal Oswal said.

Over 70% of air-conditioner sales take place between January and June. “AC is a highly seasonal product, with over 70% of calendar year primary sales in this category reported over January-June. In fact, the three-month period from March to May accounts for 50% of calendar year sales. Any disruption during this period results in a disproportionate impact on industry sales. Moreover, since ACs require installation, implying house visits by technicians, the consumer may be hesitant to purchase ACs in the current situation, although we understand that companies did manage this technicality last time around," the report said.

Companies were prepared for a good season given the forecast of a hot summer in parts of India as well as pent-up demand from a year-ago period.

However, the current surge in covid cases has led to state-specific lockdowns that are seeing several non-essential stores shut across markets.

The report said the onset of summer was strong, leading to channel filling in March. This was also partly due to expected price hikes in April on account of inflationary pressure in commodity costs.

“However, the second covid wave ultimately led to the announcement of lockdowns across various key consumption states in April 2021. This has been a dampener for secondary sales across key geographies in the country, with south faring marginally better than other regions—this appears to be almost a replay of last season," the report said.

Mint has earlier reported that companies are also cutting back on production keeping in mind lower demand. This is especially true for companies that have a large portfolio of air-conditioners, fans and coolers.

The report said that extended lockdowns will postpone demand, much like last summer.

“Also, as per channel feedback, the impact of the second covid wave could potentially lead to demand postponement by the end consumer, thus further posing a risk to AC sales in the key season. Notably, ACs w a trailing product category last year. Pent-up demand played out within months for non-seasonal and non-discretionary products, while pent-up demand was expected to play out in ACs this season," the report added.

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