AC Sales in North India Experience Initial Dip Amid Unseasonable Weather, Industry Expects Rebound

AC Manufacturers Worry Over Subdued Demand in North India Due to Unseasonal Weather

The plains of north India have had an unusually cool start to the summer this year, which has air-conditioner makers worried about subdued demand if the conditions prevail. Regional sales have already begun to contract, but industry leaders have called the drop "temporary."

While the summer season commenced positively in northern markets, unseasonal late-March rainfall dampened demand, according to a recent note by HDFC Securities. The note highlights the unusual weather conditions in the north, which include late-March and early April rains, snowfall, and a sharp drop in temperatures in Himachal Pradesh, Punjab, Haryana, and Delhi.

Godrej Enterprises Group's Business Head Kamal Nandi attributes the degrowth in the north to the weather conditions, which he believes will be temporary as temperatures are expected to rise in the coming days. In contrast, the southern region and some parts of eastern India have seen "significant growth" in AC sales, as rising temperatures spurred demand.

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As per PL Capital, the room air conditioner (RAC) segment is expected to see a healthy pickup in the quarter due to summer-led demand for the south India market. Panasonic Life Solutions India has also reported a decline in sales in the north, but expects demand to rebound in the coming months.

Industry leaders are optimistic about the demand prospects, with Blue Star Managing Director B Thiagarajan saying that anxiety over summer demand in the north is unwarranted. He points out that there is no evidence of prolonged rain throughout the summer, and the current forecast suggests an extended summer.

Temperature is already rising in certain parts of the north, such as Madhya Pradesh and Rajasthan, with temperatures reaching 35 degrees. The likelihood of a heat wave, along with the possibility of El Niño, will further propel the recovery in demand for summer products in the coming months.

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India is likely to receive below-normal southwest monsoon, receiving 92 percent of the Long Period Average (LPA) this season, according to the India Meteorological Department. This is its weakest preliminary long-range forecast in nearly 26 years.