AC Manufacturers Experience Surge in April-May Sales, Face Demand Decline in June
The air-conditioner (AC) market has displayed varied performance in the first quarter of FY26, with strong sales reported in April and May but a noticeable decline in June. This downturn has been attributed to unexpected changes in weather patterns and rising inflationary pressures that have deterred discretionary spending among consumers. Industry leaders have indicated that despite a year-over-year volume increase during this period, the June figures reflect a stagnation relative to the first quarter of FY25. Analysts further noted that price hikes between 5-20% by AC manufacturers, aimed at countering escalating raw material costs and currency depreciation, have contributed to a softening demand.
For the average consumer, the rise in AC prices, alongside inflationary pressures, means tougher decisions regarding discretionary spending. Although the overall value growth of the AC industry is forecasted at 30% year-over-year, the increased costs coupled with fluctuating weather conditions have led to a consumer market characterized by caution and price sensitivity, particularly in the Eastern regions. Reports indicate that the demand remains consistent in Southern India, while North and Central India have seen a significant decline in purchases due to unseasonable weather, leading to potential disruptions in household cooling solutions during the peak summer months.
Looking ahead, the air-conditioning sector may experience continued volatility driven by regional weather patterns and consumer spending behavior. The government’s focus should be on monitoring inflation and supporting sectors vulnerable to price fluctuations, ensuring that manufacturers can maintain a balance between cost management and consumer affordability. The Reserve Bank of India (RBI) may need to assess its monetary policy stance, particularly in relation to inflation targeting, to stabilize economic conditions that impact both consumer confidence and manufacturing margins, ensuring sustained growth in the long-term outlook for this essential industry.
Source: The Hindu
(Expert Note: This report was independently prepared by the Wealthova Economy team.)