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A FICCI survey shows that the launch of quality and superior technology products are driving volumes in air conditioning and refrigerating segments.

india Updated: May 18, 2006 12:08 IST

A recent survey conducted by FICCI on the growth of consumer durable goods market in the country, predicted that the segment is geared for a quantum leap due to technological improvements, falling prices due to competition, aggressive marketing and declining import tariffs. The survey reflected the changing dynamics of consumer behaviour whereby luxury goods are being perceived as a necessity by the higher disposable income segment. There is a discernible shift in the consumers’ preference in favour of higher-end, technologically superior products, and the demand is being spurred by increasing consumer awareness and preference for new models.

This shift explains the growing trend of products being manufactured in the organised sector of the economy and the narrowing down of the price differential between branded and non-branded goods. Further, competition is forcing companies to offer efficient after-salesservice and support and this, in turn, has swayed customer preference for branded products. The survey highlights the positive growth trends in consumer durable segments during April-March 2004-05 and indicates sustained growth during 2005-06 because of emerging opportunities and strong economic fundamentals.

The FICCI survey also gives an insight into the dynamics of growth in a competitive market environment. Some of the salient features of the survey are as follows:

Quality products with superior technology and technology upgradation has helped the industry to achieve higher growth in terms of volume and also in higher realisation in value terms.

The frost-free refrigerators segment has shown an appreciable growth of 54 per cent, while the direct cool refrigerators have seen a negative growth of approximately 15 per cent.

There has been qualitative change in consumer’s preference towards high end products.

Rate of growth in production has been more in terms of quantity (or in volume) growth rather than the growth in value terms. This is on account of constant fall in prices over the years due to competition, aggressive marketing strategies and declining import tariffs.

Because of growth in production in the organised segment and easy availability of foreign brands, the share of unorganised segment has come down sharply.

To add to it, attractive consumer loan schemes with reduced interest rates over the years by the financial institutions and commercial banks and the hire-purchase schemes have added to the surge in demand of air conditioners and refrigerators. Besides, the consumer goods companies are themselves coming out with attractive financing schemes to consumers through their extensive dealer network.

Growth highlights

Air conditioners have recorded growth rates of more than 25 per cent in terms of quantity produced, the Split Air Conditioners, Window Air Conditioners and Frost Free Refrigerators have grown at 42.6 per cent, 18.8 per cent and 13.8 per cent respectively in April-March 2004-05 over the corresponding previous period. The refrigeration industry has reached 3.9 million units in 2004-05 from 3.7 million units in the last year with a growth of 5 per cent. The Air conditioners Industry has reached at 1.2 million units during 2004-05 with a growth of 25 per cent from 9.8 lakh units in 2003-04.

The rising rate of growth of GDP, rising purchasing power of people with higher propensity to consume with preference for sophisticated brands would provide constant impetus to growth of air-conditioners and refrigerators segment.

First Published: May 18, 2006 12:08 IST