Low-cost imports fail to bring air conditioner prices down

Published April 11, 2021
Higher prices of ACs have so far not affected sales as the number of buyers continues to grow. — Dawn/File
Higher prices of ACs have so far not affected sales as the number of buyers continues to grow. — Dawn/File

KARACHI: Prices of air conditioners (ACs) continue to rise despite low cost of imports on account of a stronger rupee against the US dollar. Interestingly, higher prices of ACs have so far not affected sales as the number of buyers continues to grow.

Market retailers said the price of split ACs — one to two tonnes — have soared by Rs8,000-10,000 while some assemblers claimed a price jump of Rs5,000-6,000 from January 2020 till to date.

Talking to Dawn, an assembler said retailers are also adding extra profit margins the brunt of which is being borne by consumers.

AC prices are supposed to stay stable or come down in view of rising rupee strength against the dollar from August 2020 onwards. One dollar currently trades at Rs152-153 versus Rs168.40 in August 2020 in the interbank market.

Manufacturers are now in top gear to meet extra demand from cash-rich consumers who are more interested in getting comfort and not bothered by the high cost of living triggered by soaring food prices and utility bills.

A dealer in Karachi’s Saddar area said assemblers have revised prices upwards at least three to four times during February to March 2020 in the anticipation of more demand in summers.

One, 1.5 and two tonne inverter ACs of a high quality brand are priced at Rs73,900, Rs91,500 and Rs120,000. Compared to this, regular ACs of one tonne, 1.5 and two tonne sell at Rs65,000, Rs81,900 and Rs103,500.

Medium-range one tonne and 1.5 tonne inverter AC is available at Rs65,000 and Rs78,000-82,000. A non-inverter 1.5 tonne AC carries a price of Rs63,000.

The dealer said assemblers are cashing in on increasing demand while the government appears helpless to take any notice whether the prices are increased on genuine reasons, rising demand or costlier raw material imports.

“Many buyers are trying to lift ACs now fearing another price hike before Ramazan and more heat intensity during May and June,” he said.

Talking to Dawn about the reasons behind AC price hike, Muhammad Imran Ghani, CEO of Tri-Angels Electronics Pvt Ltd and manufacturer of Hisense in Pakistan, said, “Firstly, the rise in raw material price in the international market is one of the main reasons, in which the major impact is due to the cost of copper, aluminum and metal plate.”

“Secondly, another reason impacting the prices is the lead time from the raw material suppliers because of which stocks are unavailable in the market as per the demand. Thirdly, increase in the sea freight cost due to unavailability of containers,” he explained.

A Lahore-based manufacturer said the production cycle of AC revolves around three to four months depending on the raw material imports and their prices, exchange rate parity and market demand.

“People with money are easily buying more ACs while price-conscious buyers may not be able to buy these cooling machines,” he said.

Assemblers have already geared up to meet burgeoning demand for ACs which can be gauged from 142 per cent hike in January 2021 production of 36,540 units versus 16,379 units in January 2019. During July-January 2020-21, production of ACs rose by 42pc to 216,293 units from 152,266 units in the same period last fiscal year.

With increasing temperature, people with health issues — particularly those with diabetes and anxiety — are advised to stay indoors and keep their surroundings cool. As a result, this has created an additional demand for the cooling machines.

As prices of brand new ACs rise, those looking to sell their used machines — which have developed some fault and are not cooling properly — are offered peanuts by dealers.

Published in Dawn, April 11th, 2021

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