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Second Covid wave heralds another washout summer for consumer durables

Industry executives say that sales have crashed to near-zero levels in April and May so far and most companies have either partially restricted production catering only to exports or shut down

Published: 25th May 2021 12:38 AM  |   Last Updated: 25th May 2021 12:38 AM   |  A+A-

A salesman showing air-conditioners to public in Vijayawada on Thursday.

Representational Image. (File Photo)

Express News Service

NEW DELHI: White goods makers are bracing for a second lost summer with resurgence in infections, state-wide lockdowns, and rebound hopes increasingly challenged by a hobbled Covid-19 vaccine rollout.

Industry executives say that sales have crashed to near-zero levels in April and May so far and most companies have either partially restricted production catering only to exports or shut down their plants completely.

“Air-conditioners and refrigerators saw strong volume growth in March and early April. Then, with stiff business and movement curbs introduced across states and just 10-12 percent of the markets now open, the current consumption is less than five percent,” said Kamal Nandi, business head and executive vice-president, Godrej Appliances.

April is a crucial month in the annual calendar for the Rs. 50,000 crore domestic appliances industry, since it kicks off their summer season sales, contributing close to 40 percent of sales in the June quarter. 

This year, however, the industry is likely to see only 22 percent of the sales in Q1, a drop of close to 50 percent, said Nandi, who is also the president of industry body Consumer Electronics and Appliances Manufacturers Association (CEAMA).

Manish Sharma, President and CEO, Panasonic India and South Asia also expects the summer sales to be hit. 

“We are keeping a close watch on the situation but, we may see a loss of 50 percent against projections during the ongoing quarter,” he added. While factories remain shut, Sharma said that the current inventory is sufficient to cater to demand.

LG is also producing products just enough to cater to the global demand. 

With the lockdown-like restrictions in some states extended till June, the season would be over, said Haier Appliance India President Eric Braganza. "This is a crucial month and if you lose it, then you can not make up. We were expecting this year to be better than 2019, but not anymore," he added.

Demand revival, economists say, may take longer this year and revenge spending by urban middle class, which helped the country swiftly ride out of the recession last year, may fail to rescue the economy this time around.

As the first wave ebbed, the consumer durables demand was quick to overtake pre-Covid levels due to a combination of festive demand and pent-up demand in the second half of 2020. However, such a demand recovery remains limited because a part of the pent-up demand has been exhausted in these categories last year. Also, Covid-led substantial healthcare expenses, together with high fuel prices are likely to squeeze disposable incomes in urban households, too.

“Overall, we expect discretionary spending on consumer durables may be limited in the near term,” said Aditi Nayar, chief economist, ICRA Ratings.

Unlike last year, online retailers have also temporarily stopped selling such products as they struggle to fulfill basic essential orders for survival like groceries. 

According to Avneet Singh Marwah, CEO, Super Plastronics - the exclusive brand licensee of Thomson and Kodak range of TVs in India, the second wave has been more fatal as the government has not given permission for non-essential products to be sold even on e-commerce.

“Sales are down 65 percent and if lockdowns continue longer it will impact supply, due to which we expect to see price rise again,” Marwah added.



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