Extreme Weather Fuels Surge in ACs, Water Heater Sales

Chennai: After posting excellent summer sales, air conditioners and air coolers are bracing for a robust festive season and record-high yearly sales volumes in FY25.

Room air conditioners are expected to see a record high sales of 12- 12.5 million units in FY25, growing 20 to 25 per cent over last year. FY2024 is estimated to have ended with a volume of 9.5-10 million, witnessing a healthy volume growth of 10-15 per cent, finds ICRA.

Some of the air conditioner brands had witnessed two-fold growth during the summer due to searing heat. Early onset of summer in March 2024 compared to the normal arrival time of April, helped push up volumes in FY2024 compared to earlier estimates.

“The summer sales were record high and we grew by over 55 per cent. Even the festive season is expected to see 15-20 per cent growth. The market is estimated to grow at a CAGR of 15-20 pc for the next five years,” said B Thiagarajan, MD, Bluestar.

Structural drivers such as rising temperature levels, growing need for number of RACs per household, increasing urbanisation, disposable incomes and easier consumer financing options are set to drive the long-term industry growth. This apart, replacement demand with rising preference for energy-efficient models continues to be a crucial factor. Current domestic India’s household RAC capacity is 18-19 million units on an annual basis, which is likely to increase to 25-26 million by FY2027.

“Air coolers also have shown good growth among budget-conscious segments, especially in dry climatic regions with moderate summers. We have seen more than 2.5X growth in this category,” said Kamal Nandi, business head and executive vice president, Godrej Appliances.