With large swaths of northwest and central India having witnessed record heatwaves this year, consumer durable firms such as LG saw unprecedented demand for cooling products such as air conditioners and refrigerators this year, which is expected to sustain even though another round of price hikes looms amid rising raw material costs. The domestic air conditioner market is expected to reach 8.5 million units this year (as per industry body Consumer Electronics and Appliances Manufacturers Association), and LG Electronics India is aiming for 1.4 million units out of that pie. Last year, the company sold about 750,000 air conditioners.
Deepak Bansal, vice-president, home appliances and air conditioners, LG Electronics India, told Moneycontrol.com, “The impact (on sales) that we had this year (during H1) was unprecedented and we are seeing good traction this year. Even our global headquarters recognise India as a very strategic market. We expect similar growth next year as we will be moving forward in our technological advancements, and we are still defining the size of the industry. That will ensure we will be able to clock a topline of Rs 5,000-5,500 crore during this calendar year from our AC division.”
Interestingly, LG India has already sold over 1 million units of residential inverter air conditioners in the domestic market in the first half of the fiscal, clocking a growth of nearly 50 per cent over last year, in which split models accounted for 90 percent. This enabled the company to generate a revenue of about ₹4,000 crore from the air conditioner segment from January-June 2022. This was driven by pent-up demand after two consecutive washed out summer seasons due to the pandemic.
“We decided to convert to inverter technology in 2016 and from next year, we sold only products based on that. Six years back, the share of the inverter AC in the overall market was a mere 12 percent but now has gone up to about 80 percent. We have also strengthened our market leadership and now have a share of about 20 percent in the overall AC segment and about 24 percent in the inverter split AC segment,” added Bansal.
Noida, Uttar Pradesh-based consulting firm TechSci Research estimates the size of the Indian air conditioner market was around $4.5 billion in FY22. According to the firm, inverter technology, which is available only in split air conditioners, dominates with around 66 percent market share.
TechSci Research also claims that among the key industry players, Voltas (owned by the Tata Group) has a market share of 9 percent, Daikin has 10 percent, LG 11 percent, Blue Star 5 percent, and Johnson Controls-Hitachi Air Conditioning has 6 percent market share in FY22.Karan Chechi, the director, TechSci Research, said, “LG is able to sell record numbers because of their advanced technology and energy-efficient air conditioners. They offer air conditioners with four- and five-star ratings designed to reduce electricity consumption. Despite issues in the supply chain, they were able to see growth because LG has secured raw materials in advance to manage the hindrance in the supply chain. With two manufacturing facilities in India, LG can adapt output to meet consumer demand and guarantee a steady supply in case of increased demand."