As containers pile up at Shanghai port due to China’s ‘no-Covid’ policy, India’s consumer durable market has been impacted with the supply of components stuck for goods ranging from television panels to refrigerators and washing machines.
Nearly 25 -75 per cent of components of white goods come from China, with air conditioners being the most dependent with nearly 75 per cent of components coming from China.
Consumer durable companies in India have stocked up on components, but inventory could start to dry-up starting mid-May onwards. The immediate fall-out of it could be that some models may go out of stock and the situation could become even more severe if the lockdown in China persists.
“There are still a lot of challenges at the port of Shanghai. Short supplies across categories are surfacing. It is difficult to say how the situation will pan out mid-May onwards, but it could definitely worsen if the lockdown continues into June,” Kamal Nandi, executive vice president & president at Godrej Appliances told Business Standard.
He further said that it could take another three to four months for the situation to normalise once China lifts restrictions.
Demand for summer products has improved two years after being wiped out due to Covid-induced lockdowns impacting the sales of refrigerators and air conditioners. Nandi says that while volumes are tad higher than in 2019 summer, value wise sales are up by around 15-20 per cent due to price hikes.
Eric Braganza, president of The Consumer Electronics and Appliances Manufacturers Association (CEAMA) said that it is difficult to predict the extent of the impact the lockdown in China will have on the consumer durables industry.
“June could be bad if the lockdown continues in China, it is very difficult to accurately predict the impact right now,” Braganza added.
He said that demand for summer products has shot up substantially due to high temperatures across the country and summer was also advanced by a month.
Contract manufacturer, Dixon Technologies, has started to witness an improvement in shipments coming in, but it did face a shortage of components in the last two three weeks. “The shipments that were delayed are already in the pipeline,” Atul Lall, managing director and vice chairman of Dixon Technologies, said.
He added that due to high temperature, May and June are expected to see strong demand for cooling products which have already witnessed a steep rise in demand.
Super Plastronics, the brand licensee of Kodak, Thomson, Blaupunkt and Westinghouse in India stocked up ahead of the lockdown in the October-December quarter and in the January-March quarter. “We increased our order quantities from China as we expected some disruptions and that has worked for us,” Avneet Singh Marwah, CEO of Super Plastronics said.
Retailer Vijay Sales is yet to see an impact on goods reaching the store. “We have not witnessed a slowdown in products reaching the store as we had stocked-up in anticipation of a good summer,” said Nilesh Gupta, MD of Vijay Sales, adding the demand for summer products was extremely strong in March, but not as strong in April.
Gupta said that sales volumes of summer goods like air conditioners and refrigerators are at levels seen in the summer of 2019, but value is higher due to price increases taken by manufacturers.
He also said that despite demand being at the same level as in the summer of 2019, it was still low considering the heat wave across various parts of the country should have pushed the demand higher.