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Durables cos sales rise 10% in H1

Durables cos sales rise 10% in H1

Author | Source: The Economic Times | Tuesday, Aug 08,2006 8:56 AM

Durables cos sales rise 10% in H1

On the back of a robust semi-urban and rural demand, the consumer durable industry is recording upbeat growth trends. Overall industry sales grew 8-10% at 71 lakh units for the first half of '06. While colour televisions (CTVs) at 37 lakh units grew by 9%, refrigerators at 21 lakh units is up by 9%, washing machines at 7.6 lakh units is up by 4% and air conditioners at 6.02 lakh units is up by 54%, according to ORG-GFK estimates. The forthcoming festival season is expected to give further fillip to the industry, sources said.

It was the World Cup in June '06 that fuelled CTV sales. Conventional CTV volumes fell by 17% to 6.4 lakh units while flat TVs grew by 53% at 1.9m units. Market sources indicate that most CTV majors have phased out conventional TVs and instead are focusing more on flat TVs “We expect the CTV industry to record better growth in the second half with the festival and mini world cup coming up. The hi-end categories of CTVs, refrigerators and washing machines continues to show buoyancy,” says R Zutshi, deputy MD, Samsung India.

In the refrigerators market, the frost-free category grew by 8.3% while direct cool segment grew by 9%. LG, Whirlpool, and Samsung showed double-digit growth in the direct cool refrigerator market, Godrej sales fell by 8% in the same period under review. Coming to washing machines, the semi-automatic category with a higher base grew by 4% at 5.26 lakh units while fully-automatic grew by 8% at 2.29 lakh units.

Rising temperatures gave a fillip to the air-conditioner segment, where sales grew by 54% to 6.02 lakh units. Window ACs grew by 32% and split AC grew by 97%.

However, consistent discounts and incentives offered by durable manufacturers in the last few months are affecting their profitability and margins. Recently durable majors in Maharashtra, Gujarat and Punjab hiked prices by 5.5% in a bid to protect margins and bottomlines. Says Girish Rao, VP, marketing , LG India, ”our margins under pressure forcing us to take this decision.”

The market for both CTVs and refrigerators are shifting to the semi-urban and rural areas, as the penetration in the urban areas for these products are quite high. Hoping to cash in on the coming festive seasons, durable majors are planning to enhance the production capacities and advertising budget, sources said.

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