May 17, 2006	Wednesday	Rabi-us-Sani 18, 1427

KARACHI, May 16: Assemblers-cum-importers/distributors of split air-conditioners expect to sell over 700,000 units this year, as buyers are out much earlier because of the start of blistering heatwave from May as compared to the second week of June last year.

Smelling an upsurge in demand, the assemblers have already raised the price of split A/C by Rs1,000.

In 2005, companies involved in the A/C business had sold between 250,000 and 300,000 units in June and July alone. Market people last year started lifting A/Cs in March, April and May but unfortunately sales could not pick up due to late start of summer coupled with showers in Punjab. But after June 10, 2005, humidity and heatwave had started rising and all the unsold stocks of March, April and May were sold out in June and July, thus accounting for 40 per cent of total sales in 2005. Even the markets had to face the shortage owing to a sudden surge in demand. The companies had also raised the price of split A/Cs by Rs1,000-1,500 in June-July 2005 to cash in on the situation.

The annual output of split A/C was 350,000 units in 2004, which had surged to around 500,000-600,000 units in 2005.

This year the situation is different. Scorching heat has already commenced in Sindh and Punjab from May. Punjab enjoys the highest number of split A/C sales (65-70 per cent of total annual sales) because of record temperature and huge population.

However, one cannot overlook the short duration of power availability coupled with voltage fluctuation in the summer season in running air-conditioners especially in Karachi where situation is more irritating this year as of last year. This situation might create second thoughts among consumers for buying air-conditioners. However, power availability in Punjab is much better than Karachi.

“Our members expect to sell over 700,000 units this year in which the share of Chinese units is estimated at 500,000 units,” Pakistan Electronics Manufacturers Association Chairman Sarfarazuddin said, adding that it means Chinese A/Cs hold 71 per cent market share.

The air-conditioner market scenario has virtually changed in the last three years in favour of consumers, thanks to the entry of Chinese goods. All the leading players, who used to be engaged in trading and distribution business by importing Chinese split A/Cs, had now started assembling, he added. “This is why the market share of Chinese A/Cs, which was 90 per cent last year, has dropped to 71 per cent.”

He attributed the price hike to rising cost of raw materials and kits, adding that there was a slight shortage of split units in the markets as people had already started lifting them much earlier.

However, he said many new players had started import/distribution business as well as assembly to cope with the rising demand. The assemblers have also geared up their production.

Mr Sarfarazuddin said under-invoicing had been going on in imports from China and some market players were misusing the concessions and incentives provided by the government in import and local assembly.

He said had Chinese split A/Cs not entered the market, the current boom in demand would have been different. “People cannot afford Korean, Singapore and Malaysian assembled and imported A/Cs because of higher prices.”

Buying domestic appliances have never been so easy like these days. Although a large number of buyers prefer to buy on cash basis, there are many who opt to have A/Cs through consumer financing offered by banks and leasing companies.

Many dealers have introduced their own schemes for selling air-conditioners and other domestic appliances on easy instalments.

Leading domestic appliances makers, traders and importers are now busy in importing split A/Cs from China in huge quantities. They place orders to the Chinese suppliers who paste the names of famous brands of Pakistani companies.

The advent of split air-conditioner has virtually kicked out the concept of window air-conditioners. The local manufacturers suspended the production of window A/Cs three years back owing to entry of cheap Chinese split A/Cs.

Three years back, some leading companies used to assemble 40,000-50,000 window A/Cs a year and prices were ranging between Rs20,000 and Rs25,000 a unit. A split A/C of 1.5 tons that time used to cost over Rs40,000 as compared to the Chinese unit of Rs19,000-21,000.