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ACs need to be second time lucky in June 2021 to tide over the pandemic-induced crash in demand

April 2020 brought in an economic circumstance that many haven't witnessed in their lifetime. Demand projection models either gave extremely low weightage or overlooked it altogether.

The businesses had to adjust to the new demand projection quickly to prevent loss of profits. Air Conditioners (ACs), Fans and, Air Coolers that see peak demand from April to June were looking at a lost year.

However, as we see from the graph below, Room Air Conditioner demand quickly recovered in May 2020. In June 2020, the demand far outstripped the projections. It can be attributed to the Air Conditioner market requirements changing in a short period. People started working from home, and the need for Air Conditioning at home increased.

In 2021 the situation is quite comparable to what happened in 2020. The pandemic gripped all states in April, forcing governments to introduce lockdowns. The Fans and Air Coolers business was allowed under the essential products and services category. However, the Air Conditioners business was not allowed leading to a drop in sales in May 2021.

Monthly Air Conditioner demand trend 2019, 2020 and, YTD 2021

If the Air Conditioners business is to recover for the 2021 season, demand in June 2021 needs to beat the peak demand from June 2020. It is unlikely as there is no change in consumer requirements. Also, the early arrival of monsoon rains in northern India will reduce the peak demand window.

The market in India springs a surprise when things aren't going your way. And it may be too early to write off the year 2021 for the Air Conditioners market.

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