With the summers hitting various parts of India, the demand for air conditioners and refrigerators is expected to pick up soon, upon which, various promotional schemes such as cashback and discounts on these products will be pulled back.
Companies are going to withdraw the cashback and other promotional schemes on refrigerators, televisions and washing machines once the demand is stable, a report says.
The industry is currently reeling under sluggish demand for washing machines and refrigerators which has forced the players to cut prices. But, the prices of these white goods may bounce back once sustainable demand can be recorded.
“Washing Machines, Refrigerators, and Television (bigger than 43 inches) continue to see cashback and financing schemes aimed at reducing inventory. Pricing rationality should emerge once demand pick-up is sustainable,” brokerage firm Emkay said in a research report.
However, particularly in the TV segment, brands look to leverage the ongoing IPL season and upcoming ICC World Cup as the demand sees an uptick for the bigger screen TVs. With various cashback offers and attractive finance schemes, brands look to prop up bigger TV screen demand.
Meanwhile, demand for air-conditioners is slowly picking up and the industry has been able to clear the previous stock. The demand for ACs in northern Indian had seen a slowdown pertaining to the unexpected showers that the planes witnessed. However, now the situation is reversing, allowing the RAC (Room Air Conditioning) industry to pull back the cash back and discounts.
Room air conditioners industry is witnessing an upward trend in demand which has started to spread from South to West and now touching North and Central India. Even then, the companies will refrain from increasing prices aggressively considering the competition in the industry, according to the report. This, however, does not mean that the prices will not increase soon.
With the exception of Daikin which has increased the prices by 8%, air conditioner brands have rarely hiked AC rates. “Price increases have not happened, but will happen once demand rebound is clearly visible,” Emkay report added.