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High-end models drive durables growth

30-December-2004
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High-end models drive durables growth

The penetration levels of consumer durables and electronics remain low in the country, but surprisingly, it is not the low-end, entry-level products which are driving growth across different segments. Easy availability of consumer finance, rising income levels and declining prices of consumer electronics are enticing consumers to shell out a little extra for products with better technology and feel.

For instance, while sales of colour televisions grew by only 8-9 per cent, the flat CTV category saw a triple-digit growth in 2004. "The growth in the CTV market has been less than last year. However, sales of flat CTVs have increased by about 120 per cent. In fact, flat CTVs now account for about 30 per cent of the industry's total sales. For Samsung, the flat TV segment accounts for about 56 per cent sales now. Overall, our high-end business has grown twofold or threefold in the year," says Mr R. Zutshi, Director (Sales), Samsung India. The year earlier saw Samsung exiting the conventional 14-inch category.

In fact, both the Korean players in the segment, LG Electronics and Samsung, are learnt to be focusing on the higher end of the market.

The CTV market, however, will be crossing the landmark figure of nine million units in domestic sales this calendar year.

It has been a similar story in the refrigerator segment as well with growth in the frost-free category overtaking that in the direct cool one by far.

According to Mr Soumitra K. Ghatak, Executive Vice-President (Marketing, Sales and Service), Godrej Appliances Ltd, the frost-free category saw growth of about 20 per cent in the year. The growth in the direct cool segment, meanwhile, has been almost negligible with sales coming mainly from the lower capacity models.

Interestingly, the growth in frost- free refrigerators of more than 400 litre capacity has been upwards of 40 per cent. "The share of the direct cool segment in total refrigerator sales has dropped from 80 per cent to 75 per cent in the current year. However, for LG, the growth has been higher in the direct cool segment since we started producing a full range of direct cool refrigerators from our own facilities from earlier this year," Mr Anil Arora, Product Head - Refrigerators, LG Electronics India said.

Overall, according to estimates of the Consumer Electronics and Television Manufacturers Association (CETMA), the refrigerator segment is expected to end at 4.2 million units this year, up from 3.8 million units in the last calendar year.

Meanwhile, the washing machines segment, despite an extremely low level of penetration, managed to see a growth of only 3-5 per cent in 2004. "Incidentally, it was the tumble-wash and the top loading models which saw the highest growth in the category," Mr Zutshi said.

According to CETMA, other high-end categories which saw impressive growth in the current year are air-conditioners (estimated growth at 20 per cent), microwave ovens and DVD players.

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