Durable prices soften as firms go light on inventory

Chennai: Ahead of the new season, some of the consumer durable companies have taken to price cuts to clear their old inventory.  

The price cuts are being made by the companies which have been focusing on clearing inventory ahead of summer season. New products will start arriving in the market from February as brands are focusing on new launches for 2020.

The price cut is more pronounced in refrigerator and ACs as they are the top categories sold in the summer season. LG, Hitachi and Whirlpool have cut prices of refrigerators and air conditioners by 4-5 per cent. Samsung and Whirlpool have cut prices of direct cool refrigerators by 6 per cent and 3 per cent, respectively.

According to Emkay Global, after higher-than-estimated demand in H1FY20 and festive season of Q3FY20, refrigerator demand has moderated from December 2019. Intense winters have also played a role in delaying purchase of refrigerators.

In air-conditioners, a few brands have started lowering prices of fixed-speed ACs in anticipation of Samsung’s aggressive pricing strategy in the mass-market store keeping units as it makes a comeback. Dealers/distributors are low on inventory as they have been deferring their purchases in anticipation of lower prices. Blue Star, Lloyd and Hitachi have cut prices of their 1.5 tonne fixed-speed ACs by 6 per cent, 3 per cent and 3 per cent, respectively, in January. Pricing for the upcoming season will be dependent on Samsung’s aggression on mass products and sustained competitive intensity, finds Emkay.

Apart from room ACs, some of the other categories also have seen selective price cuts. In washing machines, the front-load category by two brands saw price cuts in January, with IFB taking the lead. IFB cut prices to partially roll back the steep price increase it HAD made on new models. IFB has cut prices by 4 per cent as it was facing stiff competition, says Emkay. Voltas Beko has again cut the price of its 6kg SKU by 2 per cent month-on-month and its cumulative cut stands at 16 per cent from the highs of September.

According to Kamal Nandi, president of Consumer Electronics and Appliances Manufacturers Association (Ceama) and business head and EVP, Godrej Appliances, the price cut is a brand-specific decision and not a sector-specific one. “Some of the brands with high levels of inventory have taken price cut. As far as the sector is concerned, commodity and ocean freight costs as well as the dollar movement are not favourable,’ he said.