PURCHASES of consumer durables in 2007 seem to have been fairly insulated from the impact of rising interest rates, Consumers played merry with purchases of hi-end LCD and plasma televisions, frost free refrigerators, convectional microwaves and split ACs. Manufacturers heavily subsidised zero percent consumer loans which led to upbeat demand trends, In fact, the durable market is expected to close to year with a 10% plus growth rates against an 8% last year. Robust growth trends of over 12% from rural markets has also cushioned companies from the negative impact of price hikes in a rising cost scenario. Consumer aspriations have picked up sharply in semi-urban markets and smaller towns where corporate interest in terms of investments in distribution and marketing to the rural markets have substantially picked up.
Gulu Mirchandani, CMD of Mirc Electronics, makers of the Onida brand said durables were relatively low-ticket purchases and therefore consumers did not shy away from purchases. “Products priced at Rs 35,000- Rs 1 lakh are being easy picked up in a segment which is relatively price insensitive. Prices of most products in the mid to low-end are competitively priced aand backed by heavily subsidised finance schemes by manufacturers, he said. Changing lifestyles are fuelling growth of hi-end categorees—while frost free grew by 42%, direct cool refrigerators grew by just around 8%; fully automatic washing machine grew by 40% and semi-automatic by 19%. The microwave convection category grew by 74% as against the solo (entry level) grew by 19%, split Acs grew by 58% and room Acs by 11% and Plasma by 59% and conventional category de-grew by 3%.
Companies like LG, Samsung Onida, Whirlpool among others are pushing sales of high-margin products to improve profitability. While prices in the colour television segment recorded some erosion owing to competition, manufacturers hiked prices of whilte goods like refrigerators and Acs to cover rising input costs. “Technology-led product launches have really caught the consumer’s fancy, prices no bar” said Pradeep Tognatta, director, sales, Samsung India.
Sales of high-margin products is cleary more feasible to the big brands wheihc ar eudner pressure from input costs and competition. Also, at a time when margins are under pressure, manufacturers do not have enough funds to make significant investments in brand building. “ And manufacturers have been supporting dealers by bearing a part of the cost so that customers don’t bear the brunt of any increase in cost,” said Pranay Dhabia, CEO, Haier India.
Value erosion that the industry has seen over the past two years, especially in refrigerators, makes a further price correction economically unviable, industry players said. Besides, even with input prices going up over the past couple of months, manufacturers have maintained prices at competitive levels, durable officals said. Industry leaders fear a high level of trade resistance on the premise that higher prices will upset an otherwise upbeat momentum in purchases. Affordable products and a general feel good factor are helping shore up volumes since the last one year with the semi-urban and rural market throwing up bigger volumes.
Gulu Mirchandani, CMD of Mirc Electronics, makers of the Onida brand said durables were relatively low-ticket purchases and therefore consumers did not shy away from purchases. “Products priced at Rs 35,000- Rs 1 lakh are being easy picked up in a segment which is relatively price insensitive. Prices of most products in the mid to low-end are competitively priced aand backed by heavily subsidised finance schemes by manufacturers, he said. Changing lifestyles are fuelling growth of hi-end categorees—while frost free grew by 42%, direct cool refrigerators grew by just around 8%; fully automatic washing machine grew by 40% and semi-automatic by 19%. The microwave convection category grew by 74% as against the solo (entry level) grew by 19%, split Acs grew by 58% and room Acs by 11% and Plasma by 59% and conventional category de-grew by 3%.
Companies like LG, Samsung Onida, Whirlpool among others are pushing sales of high-margin products to improve profitability. While prices in the colour television segment recorded some erosion owing to competition, manufacturers hiked prices of whilte goods like refrigerators and Acs to cover rising input costs. “Technology-led product launches have really caught the consumer’s fancy, prices no bar” said Pradeep Tognatta, director, sales, Samsung India.
Sales of high-margin products is cleary more feasible to the big brands wheihc ar eudner pressure from input costs and competition. Also, at a time when margins are under pressure, manufacturers do not have enough funds to make significant investments in brand building. “ And manufacturers have been supporting dealers by bearing a part of the cost so that customers don’t bear the brunt of any increase in cost,” said Pranay Dhabia, CEO, Haier India.
Value erosion that the industry has seen over the past two years, especially in refrigerators, makes a further price correction economically unviable, industry players said. Besides, even with input prices going up over the past couple of months, manufacturers have maintained prices at competitive levels, durable officals said. Industry leaders fear a high level of trade resistance on the premise that higher prices will upset an otherwise upbeat momentum in purchases. Affordable products and a general feel good factor are helping shore up volumes since the last one year with the semi-urban and rural market throwing up bigger volumes.
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