AC prices to go up, here’s why

Hit by multiple factors such as rising fuel costs and global component shortages, Indian AC manufacturers said on Friday that they have no alternative but to pass off the burden to the consumers who will have to pay at least three to four per cent more on ACs next month.

The Indian consumer electronics industry continues to face raw material shortage during the ongoing China-lockdowns and the Russia-Ukraine war.

“The rise in cost of raw materials due to an increase in fuel prices along with component shortage, commodity price inflation, disruption in supply chain, and higher demand for air conditioning solutions for both B2B and B2C spaces is pushing brands to increase prices of the products,” said Gurmeet Singh, Chairman and Managing Director, Johnson Controls-Hitachi Air Conditioning India Ltd.

“Consumers can expect a 3 to 4 per cent rise in air conditioner prices in June,” he said in a statement.

The electronics sector has already been raising prices by 2-3 per cent every quarter owing to the Covid-19 pandemic.

With supply chain disruptions, fast-moving consumer goods (FMCG) companies have also been forced to increase the prices of daily-use products.

Lockdowns in China have delayed shipments across industries and consumer electronics has taken the maximum hit.

According to Avneet Singh Marwah, CEO of Super Plastronics Pvt. Ltd (SPPL), since the beginning of the year, there have been lots of challenges like the Russia-Ukraine war, Covid situation, lockdown in China and now the Indian rupee falling to an all-time low against the US dollar.

“All this has pushed the brands to struggle in sourcing, production and supply. As a result, there has been an increase of 20 per cent in raw material and commodity prices. Thomson as a brand will increase product prices in June and July by 3-5 per cent,” Marwah told IANS.

Experts are worried that the ongoing crisis can even spill over to the festive sales season.

“With the pent-up demand for air conditioners both for B2B and B2C segments along with long summer and monsoon seasons, the demand for air conditioners is not expected to be adversely affected,” said Singh.

The government’s focus on encouraging domestic manufacturing by introducing PLI schemes and other such initiatives is expected to improve the industry and ecosystem scenario in the future which would ultimately benefit the consumers, said the industry leaders.

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