Indian White Goods Firms Resist Price Hike to Save Volumes
Mar 25, 2004
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Leading white goods makers in India have hiked refrigerator prices by a marginal Rs 200 to Rs 400 (approx. U.S. $4.50 to $9) so far this year, despite a steep hike in steel and compressor prices, preferring to absorb the cost increase, rather than upset any growth in volumes.
Prices have been hiked only for the new models launched in the market and senior Samsung India officials said that the company is not hiking prices.
"We have brought out a new range of models this time, which are dearer by a marginal Rs 10 to Rs 300 (approx. U.S. $4.25 to $6.70), owing to the steel prices. But everybody is holding on to the existing price levels?" said an official.
The demand for refrigerators and air-conditioners is primarily driven by urban demand, with 40 percent of the consumption coming from the replacement market.
Industry sources feel the pressure to meet targets may lead to a price erosion.
Samsung, LG, Whirlpool, Electrolux, Godrej Appliances, and Videocon are competing fiercely to drive volumes. Raj Jain, managing director of Whirlpool India said the company is still selling old inventory, which has not been affected by the steel price hike.
"Once we put out the new models in the market, we may marginally hike prices. I feel all the discounts and freebies that the consumers are used to have already happened last year," he said. "Any further price cut would make it economically unviable."
The refrigerator market is expected to record a 10 to 12 percent growth in volumes.
The industry is expected to close the year with sales of 34 lakh units. In the past few months, each player put out price-fighting models and slashed prices to drive growth.
The direct cool (DC) segment accounts for 82 percent of the total 3.3-m refrigerator market. Frost-free (FF) models, which constitute the higher-end segment, account for the rest. The 165- to 225-liter segment comprises 75 percent of the total demand. (The Economic Times, India)
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