AC manufacturers face challenges as unseasonal rains, rising costs cloud early summer demand

Plastic, LPG, and rain threaten early AC sales. Representational Pic

Air-conditioner manufacturers in India are treading cautiously after unexpected rainfall caused by western disturbances swept large parts of the country.

March is usually the start of strong demand for cooling products, but the unusual weather has left industry leaders uncertain.

Kamal Nandi, Business Head of Godrej Enterprises, said that temperatures are expected to rise in April in Delhi and North India, which could help normalize sales. "It's too early to predict any impact. Intermittent rains in some areas are not an indicator that the summer demand won't pick up," he added as per PTI reports.

Rising costs add to industry worries

The industry is also grappling with rising prices of plastics and other raw materials, driven by geopolitical tensions in West Asia. These increases, combined with higher freight and oil costs, are expected to lead to a second round of price hikes.

Godrej has announced a 5-10 percent price hike from April 1, 2026, while Haier India warns that the limited supply of LPG to factories may reduce production of room air-conditioners (RAC) by 20-30 percent just before the peak season.

Blue Star MD B. Thiagarajan also highlighted that rising input costs and thin margins will likely be passed on to consumers, adding pressure on demand.

Impact on large appliances

Rising plastic prices are affecting other household appliances like washing machines and refrigerators. Haier noted that plastics make up 20 percent of material cost for washing machines, which could force a 10-12 percent price increase. Some consumers may switch to lower-capacity or lower-quality models to manage the higher cost.

Industry competition and market outlook

After a challenging 2025 marked by unseasonal rains and weaker demand, the RAC industry is preparing for stiff competition in 2026. India's air-conditioner market is estimated at around 13.5 million units, with major players like Voltas, LG, Daikin, Blue Star, Hitachi, Panasonic, and Lloyd competing for market share.

While growth is expected compared to last year, industry executives warn it may not reach record levels seen in 2024, when extreme heatwaves drove strong sales.

Despite the challenges, manufacturers remain hopeful that rising temperatures in April and continued consumer demand for cooling solutions will stabilize the market. The sector's performance will depend on weather patterns, geopolitical tensions, and raw material availability over the coming months.

(With PTI Inputs)