KARACHI, April 11: Assemblers of split air-conditioners are not highly optimistic regarding the prospects of sales during the current year. They indicate that the market has a carryover stock of around 200,000 units of split A/Cs from last year.
They had anticipated sales of 700,000 units in 2006 but it remained below their expectations for a variety of reasons.
A market survey by Dawn reveals that average prices of split A/Cs have increased by Rs1,000 per unit depending on the model this year. In 2006, rates were jacked up with same rate at the start of summer season.
Producers attribute the increase in rates to the rising cost of raw material in global markets.
The A/C market is dependent to some extent on weather as normally sales pick up momentum with rising mercury. Assemblers say that 70 per cent sales out of total annual output are cleared mainly in the buying season which begins from March and ends in July.
“We cannot again predict sale of 700,000 units this year as the market has an unsold stocks of 200,000 units of last year,” chairman Pakistan Electronics Manufacturers Association (PEMA) Sarfarazuddin told Dawn.
“Much depends on the intensity of heat wave in months to come as large volumes of sales rely on rising heat,” he added.
He said that the share of Chinese units was around 500,000 units out of total sales.
Convener Refrigerators and A/C Manufacturers Group Shakeel Ahmad also reckoned that the market had huge unsold stocks of last year.
Last year the sales target could not be met owing to increase in oil prices that pushed up general inflation and resulted in shrinking purchasing power of consumers. Besides, customers, interested in buying appliances on credit had to pay higher interest rates.
He recalled that split A/C sales got a boost from 2003-04 when banks came out with massive loan offers for purchasing home appliances. Besides, general inflation rate was hovering between five to six per cent and consumers had been making some savings.
He said prices of split A/Cs had been going up because of increase in raw material prices (aluminum, copper and plastic materials) in world markets. He ruled out the possibility that increase in loadshedding was restricting consumers from purchasing A/Cs.
Mr Shakeel said that there would be growth in sales this year too but it would not be matching the previous years’ figures.
Irrespective of increase in prices, the market has virtually changed due to entry of Chinese goods in the last four years. Consumers are now really benefiting from the entry of cheap Chinese products changing the lifestyle of many people.
This year loadshedding has started from late March but the duration ranges between two to three hours. If the duration increases then it may result in low turnout of A/C buyers.
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. Punjab accounts for highest number of split A/C sales of more than 60 per cent out of total annual sales owing to record temperature and huge population.
However, people know about the quality of Chinese goods but affordable prices as compared to Korean, Malaysian and Thailand assembled brands lure them to take the risk. People are also slowly adopting to live European and American lifestyle by disposing of the products after few years.
All the leading players who use to be engaged in trading and distribution business by importing Chinese split A/Cs are now assembling split A/Cs. However, some market players are directly importing the unit from China and selling them with various names.
Buying domestic appliances have never been so easy like these days. Although a large number of buyers prefer to buy on cash basis, many opt to have A/Cs through consumer financing offered by banks and leasing companies.
Many dealers have introduced their own schemes for selling split A/Cs and other domestic appliances on easy installments.
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 four years back owing to entry of cheap Chinese A/Cs.
