White goods makers consider price hikes amid skyrocketing input costs

Several large companies have already raised the prices of air conditioners, washing machines, televisions and other household appliances in January. However, companies said higher input costs deserved another round of hikes in the current quarter for a line of products. The price increases will be passed on in installments, however, the companies said.

“The increase in raw material prices in the fourth quarter led to an upward revision in the prices of the white goods industry. We strive to use the best quality materials with a focus on durability and lowering the total cost of ownership for our consumers … With continuously increasing input costs, prices may increase by July once the existing stock runs out, ”said Manish Sharma, President and CEO, Panasonic India and South Asia.

Non-essential stores are facing temporary closures in all markets. In addition, consumer confidence is also low, which further weakens demand.

“For now, some states allow the opening of non-essential stand-alone stores. So I hope to see an improvement in sales. But the feeling is low and people are not inclined to go out. We are monitoring the situation closely, but we could see a loss of almost 60-65% from the sales forecast in the current quarter, ”he said.

The prices of essential commodities such as copper, plastics, steel and aluminum used in the white goods industry hit multi-year highs in the second half of the previous fiscal year, prompting increases of awards earlier this year. Prices for copper, steel and aluminum rose 44%, 38%, 22% and respectively, brokerage firm Motilal Oswal Institutional Equities said in an industry report earlier this month. . “This had a negative impact on the gross margins of companies in the third and fourth quarters of FY21. All companies reported a 2-5% drop in margins in the second half of FY21, “he added.

Bajaj Electricals said it launched another round of price increases in May that will be reflected in the market once the stores resume operations.

“We made a price increase of 6 to 8% in January. And we’ve taken another 3-4% price hike now in May. The January one is fully in effect, the May hike is not yet in effect because the markets have been blocked. Although we have experienced a price increase, the impact of this has not yet been seen in the market, ”said Anuj Poddar, Executive Director of Bajaj Electricals Ltd.

Brokerage firm ICICI Securities said increases in input costs will be passed through in installments over the next three to four quarters. However, the price increases will have a negligible impact on volumes in the medium term, he said. White goods and sustainable businesses have increased prices by 5-18% for all products, he said.

However, he said demand could return once the markets open. “White goods and durable goods are (predominantly) problem-solving categories and therefore consumers may defer their purchases. The consumption loss appears to be small, ”the report said.

But Poddar said inflationary pressures are expected to continue. “In terms of transferring increases to consumers, there is a lag effect. The highs were very clear in the raw materials to pass at once to the consumers “, he added.

Businesses again lost sales during the peak summer season, when demand for air conditioners and refrigerators is generally high. Others said they were considering cost-cutting measures before passing the increases on to end consumers.

“The impact of rising input costs and shortages in the global supply chain continue to be a challenge in the area of ​​consumer durables. While we had already taken cost-based price increases prior to foreclosure, we continue to look at internal efficiencies and cost reductions to minimize the impact on the consumer and cushion the blow, ”said Vishal Bhola, Managing Director – India, Whirlpool.

Bhola said with much of the country on lockdown since the start of the second quarter, sales have certainly been affected. “However, based on our experience over the past year, we are confident that once the restrictions are lifted and consumers have the opportunity to buy, demand will rebound,” he added.

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About Natalee Broderick

Natalee Broderick

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