AC Makers Lower Sales Projection to 10-15% for 2025 Despite Spike in June Numbers

Unrelenting heatwave across north and east regions has spiked sales of room air-conditioners (RAC) in June, but intermittent rains in several part of the country amid peak demand season have forced the industry players to lower sales projections to 10-15% for this year.

The summer, which is the peak season for sales of room air-conditioners, has disappointed AC makers this time, though there are some silver lining in June with impulse purchases happening due to the heatwave.

RAC makers said after having an encouraging numbers in February and March, helped by an early arrival of summer, they were expecting a high double-digit volume growth of around 25% from the last year, and had also built up inventory.

"We all had planned for a 25-30% growth, which is not going to take place. This is a disappointing summer; that is the truth. It is part and parcel of the game," Blue Star Managing Director B Thiagarajan told PTI.

"We have to manage the situation and move forward," he said, adding that now the RAC industry will end up with 10-15% growth this year, despite a good start in February and March.

The India Meteorological Department (IMD) had last week said that temperatures are likely to have a gradual drop from the mid of June as a western disturbance is expected to move in, bringing cooler winds, rain, and thunderstorms.

According to Thiagarajan, the current June quarter will be bad for the RAC industry. However, he expects a bounce back in the September quarter. He expects some recovery in the festive season and also in the quarter when the energy label changes, as makers offer discounts to liquidate the old inventory.

"A lot of pre-buying takes place whenever energy label changes are there. People will end up buying in that quarter," he said.

Voltas MD & CEO Pradeep Bakshi said in the last two months, there has been hardly any growth for the industry in comparison to 2024 sales.

"Rather, actually, there has been a de-growth for the industry. So, I don't think people are now looking at big growth numbers in the first quarter (June quarter). Hitting last year's number would itself be a challenge," Bakshi said.

The peak summer months have actually been impacted by the weather. It played a spoilsport during the peak summer months. After losing April and May, it's difficult to recover in the rest 10 months, said Bakshi.

However, he also added last some days are showing good results as summers are peaking up, temperatures are rising, especially in the northern region of the country, which may pave the way for better results in the coming months.

Bakshi also added: "It looks difficult that in the balance of the month, achieving the last year's target. Last year's achievement and overshooting it by 25% looks a bit of a challenge." According to the latest annual report of the Tata group firm Voltas, it had achieved record-breaking milestones with the highest-ever AC sales at over 2.5mn units and air cooler sales of over 0.5mn units.

Haier Appliances India President N S Satish said YTD (year till date) growth for the RAC is 30% on a year-on-year basis.

"But the months of April and May were not good. It had a de-growth of 10-15%, actually. While in June, sales have picked up again," he said, adding, "In February and March, there were a lot of planned purchases, where customers had pre-ponned it, because the previous year they had seen the shortage." While in April and May, the unplanned customer who impulsively buys air-conditioners because of rising temperatures delayed their purchase because the temperature did not rise. But again in June, suddenly, in the last 10 days, especially the northern part of India has started picking up.

"In fact, if I compare June last year versus this year's June sell-out, it's almost now 20% plus to the consumer," he said.

Though, Satish said, this year, the industry has "short expectations" for 2025 and it will not have huge growth like last year, but he does not rule out an overall growth of 10-15%.

"Last year was an unprecedented summer. On that, if the industry is still growing, it is a tremendous performance. It will definitely have 10-15% growth over the last year," he said.

The Indian room air-conditioner market is one of the fastest-growing markets globally, in which over 12-15 companies compete. The market is estimated to be around 15mn units.