Rising Prices and Weather Concerns Weigh on AC Market

AC Manufacturers Turn Cautious as Unseasonal Rains, Rising Costs Threaten Summer Demand​

Weather Disruptions Cloud Early Summer Sales Outlook​

New Delhi, March 22: Air conditioner manufacturers in India are adopting a cautious stance after unseasonal rainfall, driven by western disturbances, swept across several parts of the country, potentially disrupting early summer demand that typically drives strong sales in March.

The cooling products segment usually witnesses a demand surge during this period. However, the unexpected weather pattern has created uncertainty among manufacturers. Despite this, industry executives remain optimistic about a temperature rise in April, which could revive demand.

Kamal Nandi, Business Head and EVP of Appliances Business at Godrej Enterprises Group, indicated that temperatures are expected to increase soon across Delhi and northern regions. He noted that intermittent rainfall should not be seen as a long-term indicator of weak summer demand and expects conditions to normalize in April.

Rising Input Costs and Price Hikes Add Pressure​

Alongside weather concerns, manufacturers are grappling with rising input costs linked to ongoing geopolitical tensions in West Asia. These tensions have pushed up prices of key raw materials such as plastics and increased freight costs.

The industry has already implemented price hikes earlier in the year following new energy labelling norms mandated by the Bureau of Energy Efficiency from January. A second round of price increases is now imminent.

Godrej Enterprises Group expects a price hike of 5 to 10 per cent from April 1, 2026. Industry leaders warn that rising costs could dampen consumer demand, especially as all major players are planning similar increases.

LPG Supply Constraints May Hit Production​

Manufacturers are also facing supply-side challenges due to reduced LPG availability for industrial use. To prioritize household consumption, LPG supply to industrial and commercial users has been cut from 80 per cent to 65 per cent of average consumption.

Haier India President N S Satish stated that this reduction could lead to a 20 to 30 per cent cut in production if the situation persists, particularly ahead of the peak summer season. LPG is a critical fuel in air conditioner manufacturing, especially in paint shops that require high-temperature drying.

Appliance Prices Likely to Rise Across Segments​

The surge in plastic prices is expected to impact not only air conditioners but also other large appliances such as washing machines and refrigerators.

According to industry estimates, washing machine prices may rise by 10 to 12 per cent, as plastics account for nearly 20 per cent of material costs in this segment. Manufacturers suggest that higher prices could lead to consumer downtrading, with buyers opting for lower-capacity or lower-specification models.

Blue Star Managing Director B Thiagarajan highlighted that increasing input costs are squeezing margins across the industry, forcing companies to pass on the burden to consumers.

Industry Growth Outlook Remains Uncertain​

While some growth is expected compared to last year, industry leaders do not anticipate a repeat of the record performance seen in 2024, when intense heatwaves drove strong demand.

Thiagarajan noted that unless the West Asia conflict eases soon, the summer season may not meet expectations. The industry is also recovering from a weak 2025, when unseasonal rains and other factors impacted sales.

Competitive Market Dynamics Intensify​

The Indian room air conditioner market, estimated at around 13.5 million units, is expected to witness intense competition this year. Major players including Voltas, LG, Daikin, Blue Star, Hitachi, Panasonic and Lloyd are likely to focus on gaining market share after experiencing negative growth in 2025.

With weather uncertainties, rising costs, and supply constraints converging, the industry faces a challenging start to the crucial summer season.