AC market heats up on people’s lifestyle changes

Riding on lifestyle changes, the local air-conditioner market has been witnessing a sharp rise in sales during the pandemic-led new normal even as most other luxury products have limped along.  

Local AC manufacturers and traders say AC sales have increased by 25-30% more than at any other time in the first three months of this year. And the sales are several times higher compared to last year.

In 2020, AC sales of all brands dropped due to misinformation about Covid-19 as well as a pandemic-led long factory and market closure. But the market rebounded quickly as more and more people installed air-conditioners at home as their home office hours were prolonged.

On top of this, rapid urbanisation, changes in weather, an increase in per capita income, growing size of the middle class, affordable AC prices and acceptance of the air conditioning system as a utility rather than a luxury item also augmented the market growth.

The country's electronics market giant Walton leads the local air conditioner market.

Tanvir Rahman Sajib, chief executive officer at Walton Air-Conditioner, said the company registered more than 30% growth in the first three months of the year compared to 2019. Compared to last year, the growth is more than 100%.

Esquire Electronics Ltd, the largest vendor of foreign brands in the country, thinks that climate change and affordable prices are the crucial factors behind the market boom. Esquire distributes several international brands, such as General Air Conditioner of General

Electronics and Japan's Sharp and Dutch brand Philips.

Manzurul Karim, chief marketing officer of Esquire Electronics, said the virus outbreak last year instilled a kind of fear among people.

Besides, the country went through the pandemic-driven 66-day general holiday, when markets and factories were shuttered. These factors contributed to the fall in sales last year.  

However, the market has turned around as AC sales have increased by at least 30-35% this year compared to regular times.

In the meantime, Vision Electronics of the Pran-RFL Group is slightly worried about the growth as the supply system is yet to normalise.

Kamruzzaman Kamal, director (marketing) of Pran-RLF Group, said the group's sales are yet to normalise since the 2020 virus outbreak-led market collapse. He, however, is optimistic about the future as Vision AC returns to the market with energy saving technology.
 
AC market in Bangladesh

Time was when air-conditioners or air-coolers were treated as luxury items in Bangladesh. But people now have accepted air conditioning as an essential as more and more upper-middle class people are having ACs installed at home.

The tendency is more visible in the capital Dhaka. Dhakaites now cannot think of cars, shops, cinema halls, hotels or restaurants without air-conditioning facilities. The recent inclusion to the have-an-AC-list is the residence as home office, prolonged amid the rise in mercury.    

According to AC makers, 4.5 lakh units of ACs were sold in the country in 2019 with a growth of more than 15% per annum. In terms of money, annual sales amounted to more than Tk5,000 crore.

The growing market stumbled in 2020 in light of the Covid-19 outbreak in Bangladesh. Last year, fewer than 3 lakh units of ACs were sold. However, sales this year are expected to surpass 6 lakh units, riding on huge demand.

Even ten years ago, the AC market was completely dependent on imports of international brands such as General, Hitachi, Panasonic, Singer, Samsung and LG. But local brand Walton now occupies more than 30% of the market. Besides, Samsung, MyOne, Unitech,

Transcom Digital, Vision, Jamuna and Butterfly AC are being manufactured locally.

On the other hand, only about 35% of ACs are now being imported.

Mesbah Uddin Ahmed, chief marketing officer at Fair Group, thinks all the local brands stepped into AC production mainly due to value-added tax exemption in production. Fair Electronics has recently set up a Samsung AC factory in Narsingdi.

Mesbah said due to climate change, temperature in Bangladesh is rising as in other countries. People are relying on air-conditioning systems to survive extreme heat. As a result, the market is getting bigger.

He also thinks that the AC market is getting bigger due to the emergence of the middle class and affordable prices.
 
Affordable prices are the catalyst 

Nowshad Hossain works at the marketing department of ACI Group at a monthly salary of Tk50,000. He has three family members, including a one-year-old child. He recently bought a locally manufactured AC at Tk40,000.

"The temperature in Dhaka is unbearable. I dared to install an AC as the price is low and has EMI [equated monthly installment] facility.

The air-conditioner will give relief to my child this summer," he added.

Even five years ago, the price of a one-tonne AC was more than Tk1 lakh. But there are now Chinese ACs in the market at Tk30,000-35,000. Besides, Walton and Pran-RFL manufactured one-tonne ACs also sell for Tk35,000-40,000.

Esquire Branding Head Abdur Karim says an inverter AC is available at Tk30,000-40,000 currently. Even if one buys a good foreign brand, the price is within Tk1 lakh. But the price was much higher five to six years ago.