Business
oi-Ashish Rana
People who are planning to buy an AC, TV, washing Machine or other home appliances on Diwali or ahead of Diwali will now have to pay more from 1 October. The major electronics appliances companies are raising prices on the products by 5-8 percent ahead of festive season.
Ahead of Diwali, appliance manufacturers including Blue Star, Godrej, and Haier are raising prices by 3-10% on ACs, TVs, and washing machines from October 1 due to higher commodity and freight costs, impacting the festive shopping season.
The companies are set to raise price because of the cost of copper, steel, aluminium and other materials has gone up. Higher freight costs and changes in currency rates are also adding to their extra expenses.
This is going to be third time when appliance and consumer electronics are raising the price in this year. AC prices are expected to rise by 5-8 percent, while washing machines, refrigerators and LED TVs can be come 3-4 percent expensive.
These price increase comes just before when India is entering festive shopping season. While some companies are afraid that higher prices can affect sales. However, consumers may still be able to buy products at the old prices because dealers have stocks that were brought before the price hikes.
Major Brands Confirm Price Hikes
Companies like Blue Star, Godrej Appliance, Haier, Daikin, and Super Plastronics have already announced or confirmed price hikes ranging from 4-10 per cent across categories, while Panasonic said it was still evaluating the situation before deciding on any increase.
According to sources, LG and Bosch Home Comfort, which owns Hitachi-branded air-conditioners, have also increased AC prices by around 5 per cent.
Blue Star Cites Rising Commodity Costs
Blue Star Managing Director B Thiagarajan said prices of ACs and deep freezers have already increased by 5-8 per cent due to higher commodity costs.
“All the commodity prices have been going up because of the war. Copper, steel and plastics have all become costlier,” he said, adding that this is the third price increase undertaken by the company this year.
Comparing prices with last year’s festive season, Thiagarajan said costs have risen around 15 per cent, but with GST benefits of about 10 per cent now available to consumers, the net impact for buyers would work out to roughly 5 per cent more.
Godrej Says Further Hikes Are Inevitable
Kamal Nandi, Business Head and Executive Vice President, Appliances Business, Godrej Enterprises Group, said another industry-wide round of price increases has become ‘inevitable’ after commodity prices rose 8-10 per cent since the last revision.
“Price hikes of 5-7 per cent across categories will happen. The timing may differ from brand to brand, with some implementing it from October and others from November, but it has to happen,” he said.
However, he also said consumers would still have an opportunity to buy products at existing prices during the festive season as inventory procured before the hikes remains available in the distribution channel.
“There are pipelines which will last for about a month to one-and-a-half months. Diwali should largely get covered with old-price inventory. Post-Diwali, the new prices will certainly take effect,” he added.
Haier Plans More Price Increases
Haier India President NS Satish said: “If we avoid taking price hikes, we will lose money. If we increase prices, sales may be slightly impacted, but there is no choice,” he said.
Satish said the company plans to raise prices by around 5 per cent on RAC from October 1 and may undertake further increases after Diwali and again in January if input costs continue to rise.
Besides, he also confirmed a price hike of 2-3 per cent in other categories such as LED TVs, washing machines and others.
He noted that copper prices have risen significantly over the past year, sharply increasing manufacturing costs, particularly in the air-conditioner segment where copper is a critical component.
Satish said Haier plans a cumulative hike of about 15 per cent between now and January, 5 per cent from October 1, another 5 per cent around December, and a further 5 per cent in January.
Copper Prices Add To AC Manufacturing Costs
He said copper prices, which were USD 8,000-9,000 per metric ton last year, have now touched USD 14,500 and are expected to keep rising, noting that an air-conditioner requires 3-4 kg of copper.
Generally, the festive period covering Onam through Dussehra and Diwali typically contributes 30-40 per cent of appliance manufacturers’ annual sales, according to sector reports.
Daikin Raises Prices Amid Cost Pressure
Daikin Airconditioning India Chairman and Managing Director Kanwaljeet Jawa said the company has already increased prices by 8-10 per cent from September 16.
“Copper prices have gone up by almost 25-35 per cent. The dollar is strengthening and commodity prices continue to rise. Companies are under tremendous pressure,” he said.
On consumer demand, he said it remained good for now.
“I don’t know what will happen going forward, but everybody is aware of the reality in the marketplace right now. It might affect things in the long term if the situation doesn’t improve,” he said.
TV Prices May Rise Further After October
Super Plastronics Pvt Ltd (SPPL), which manufactures and markets television brands such as Thomson, Kodak and Blaupunkt in India, plans to increase TV prices by around 7 per cent after October, while appliance prices have already risen by 4-5 per cent.
SPPL Director Avneet Singh Marwah said higher prices could impact festive demand as consumers generally expect discounts and promotional offers during the season.
“Global instability and rising costs will definitely have some impact on consumer sentiment,” he said.
Panasonic, Videotex Assess Market Impact
Panasonic Life Solutions India Head of Product Marketing and Planning (AC category) Abhishek Verma said the company is closely monitoring market conditions to strike the right balance between pricing and demand.
“The industry continues to witness unprecedented cost pressures and we are evaluating the situation carefully,” he said.
Videotex Director Arjun Bajaj said rising freight costs and supply chain disruptions are expected to create a new pricing benchmark after Diwali.
“Television prices for smaller screen sizes could rise by up to 20 per cent, while larger screen sizes may see increases of up to 10 per cent, depending on screen size,” he said.
