Summer AC Demand: North Cools, But South Surges as Industry Predicts Major Rebound

Air-conditioner manufacturers face contrasting seasonal pressures, with parts of North India reporting subdued initial demand. However, industry experts are largely asserting that the dip is temporary, pointing instead to robust sales momentum building in the Southern and Western markets.

Regional sales contraction has been observed in northern territories, citing unseasonal late-March rainfall as a key dampener. This unusual weather has created worry among consumer durable players, who had anticipated a strong summer season.

Northern Slowdown Sets Off Industry Concern​

The initial consumer demand in northern markets saw a slowdown following the unusual weather patterns. Late March and early April brought unseasonal rains, snowfall, and a sharp drop in temperatures across Himachal Pradesh, Punjab, Haryana, and Delhi.

Godrej Enterprises Group’s business head, Kamal Nandi, acknowledged the degrowth in the north due to current weather conditions. He, however, maintained that this downturn is likely temporary, predicting that temperatures are expected to rise sharply in the coming days.

Panasonic Life Solutions India also reported a decline in sales in the northern region. Despite the immediate slowdown, the company remains confident, stating that the demand is expected to rebound in the coming months.

Southern Regions Fuel Industry Optimism​

The narrative of weakness in the north is being sharply countered by strength in other regions. Nandi noted significant growth in AC sales across the southern region and parts of eastern India.

Brokerage firms predict a healthy pick-up in the quarter for the room air conditioner (RAC) segment, driven by sustained, summer-led demand in South India. Experts highlighted that the demand in several areas, particularly the south and the west, remains robust due to already high temperatures.

Blue Star managing director B Thiagarajan dismissed anxieties over the northern demand, citing forecasts that suggest an extended summer period rather than continuous rainfall.

Weather Patterns Drive Stronger Long-Term Forecast​

Temperature is already rising in key western markets, with parts of Madhya Pradesh and Rajasthan recording temperatures of 35 degrees. Thiagarajan added that the increasing heat in Gujarat and Maharashtra ensures demand remains strong.

Analysts suggest that indicators of an impending heatwave, coupled with the possibility of El Niño, will significantly prop up the recovery in demand for summer products.

Despite a cool start in the north, the overall market sentiment remains positive, driven by macro weather indicators. The India Meteorological Department issued its weakest preliminary long-range forecast in nearly 26 years, projecting that India may receive below-normal southwest monsoon, accounting for 92 percent of the Long Period Average (LPA) this season.

Navigating Price Hikes and Demand Resilience​

Facing rising raw material costs, AC manufacturers recently implemented price hikes ranging between 5 and 15 percent. The industry's current confidence rests on the expectation that resilient consumer demand will absorb these price increases without negatively impacting sales volume.

Key sales leaders reiterated their focus on monitoring evolving weather patterns and demand dynamics over the next few months. Industry consensus suggests that while regional variance is occurring, the overall seasonal demand trajectory is geared towards a strong rebound.