Split ACs leave competition cold with cheaper options, aesthetics

SPLIT AC makers are recording sizzling growth numbers this year by offering competitive pricing, better aesthetics and focusing on smaller markets. The price gap between split ACs and window ACs has significantly narrowed down from Rs 10,000 to around Rs 3000-4000 encouraging purchases. Split ACs will account for 53.1% of total industry sales against 44.4% last year while window ACs will account for 55.6% against 46.9% in 2006. Most of the split ACs are imported from China, industry sources said. Currently, a 1.5-ton window AC is priced around Rs 16,000 while a 1.5-ton split AC is priced around Rs 20,000-21,000. Installation flexibility, superior aesthetics, quieter operations, cheaper finance options, narrowing price gap are some of the factors contributing to the higher growth of split ACs. The durable industry is targeting sales of around 2 million units (last year AC sales at 1.05 million) with a majority of sales expected in the next few months. "We have launched a range of split ACs with superior features and expect split ACs to contribute to more than 50% of total AC sales," said Pradeep Tognatta, director - sales, Samsung India. In fact, durable majors are strengthening their product portfolios with incentives, expanding sales and distribution networks and are supporting the range of new product launches with larger advertising budgets. Sales of split ACs have been looking up as more and more customers are also upgrading from window ACs in the urban markets, industry sources said. The AC market is expected to recorded volume sales this summer, thanks to cheaper models, consumer financing and a sharp jump in demand from the residential segment. "With awareness picking up even among rural consumers, AC manufacturers are pushing room ACs to these markets and split AC sales are largely taking place in urban and tier I markets," said CM Singh, VP, TCL India. The combination of a higher adspend, cheaper financing options and increased consumer contact has moved the AC into retail showrooms, with the retail market expected to account for much as 60% volumes this year. Having to contend with wafer-thin margins, the industry seems wary of a further fall in prices this summer, sources said.

Courtesy: EconomicTimes