Unrelenting heat sets AC demand on fire, scorches buyers' pockets as India's torrid summer goes on and on

Amid unprecedented demand for cooling devices in the wake of an unrelenting heat wave, both sales and prices of ACs are on fire this summer.

In most parts of India this year, high temperatures have regularly caused supply issues and shortage of critical on-ground manpower. Some inputs have also become costlier. All these factors have combined to send AC retail rates jumping as much as 6 to 8% (June 2024 numbers).

Sharply rising demand has caused supplies to run short -- both of fully-built products as well as components, a ToI report (by Pankaj Doval) said citing executives at some of the top AC-makers such as Voltas, LG and Llyod.


According to industry officials cited by ToI, the unexpected surge in demand has caught both the industry and the supply chain off guard, resulting in shortages.

One of these officials told the newspaper that there is short supply of even the manpower on the ground for installation and service. A number of AC companies are also shifting their stocks from south India - where temperatures are getting lower - to the north where heat is still very high, the official added.

Stronger demand has led to higher prices for consumers. Companies say that they have no option but raise prices because input costs have risen. Some companies have absorbed the costs, but some have not been able to, ToI reported citing some top company officials.

"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," ToI's report said quoting an industry insider.

Sanjay Chitkara, senior VP at LG Electronics India, told ToI: "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."

According to Sunil Vachani, president of Consumer Electronics and Appliances Manufacturers Association (CEAMA), AC industry is expected to grow by 30-40% this year. The industry sees sales at 15 million units in 2024, against last year's around 11.5 million units.

Voltas, one of the top players in India, told ToI 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.

Alok Tickoo, executive VP at Havells-owned Lloyd, told the newspaper that the company is investing an additional Rs 50-60 crore to expand its AC manufacturing capacity at Ghiloth in Rajasthan and Sricity in Andhra Pradesh.