Coronavirus attack on TV, AC costs

Grappling with supply chain disruptions and crippling production activities due to the unceasing coronavirus spread in China, consumer durable makers are mulling a price hike for some appliances as early as March. The makers of televisions have indicated that prices can go up by 8-10 per cent, while consumers need to brace themselves to shell out a premium of around 7-8 per cent for air-conditioners before the peak summer season.

“With the current situation, customers may begin to see shortages on the retail shelves for certain models of ACs by mid-March. In fact, consumers, who may still be undecided about their AC purchases should go ahead and make the purchases for the summer season, as the industry on an average is expected to hike air conditioner prices by 3-5 per cent due to freight challenges,” said Santosh Salian, product group head (air conditioners), Godrej Appliances.

According to sources, most companies in the Indian electronics industry — which relies heavily on China for components, sub-assemblies and even full products — have supplies stocked up for the next one-to-two weeks; beyond that, if the supply situation persists, companies could have to take production cuts in the range of 20-40 per cent.Meanwhile, they added, the manufacturers have been looking at other alternative destinations like Taiwan, Hong Kong and South Korea for importing components, but the supply equation is still not working to cater to the demand.

“The whole value chain has gone for a toss,” said Sumit Padmakar Joshi, managing director of Signify Innovations India. With the industry already seeing a shortage of electronic components, the domestic lighting industry may increase prices of LED bulbs and lights by up to 10 per cent from March, he said.

Input prices for many critical components for appliances across the sectors have already gone up, noted Avneet Singh Marwah, CEO, SPPL, brand licensee for Thomson and Kodak TVs in India. “While prices of smaller TVs are likely to go up by 10 per cent, it could be even higher for large-size TVs as there is already 30-40 per cent increase in panel prices due to the impending reduced supplies.”

“In the long run, we need to further develop the manufacturing ecosystem in India, especially for the critical components, aligned to the Make in India initiative. This will help avert such situations in future,” said Kamal Nandi, president, Consumer Electronics and Appliances Manufacturers Association. Typically, the TV industry has an almost 60 per cent dependence on China for components.

8-10% price hike indicated by television manufacturers

60% dependence by TV industry on components from China

In dire situation
Most companies in the Indian electronics industry, which is dependent on Chinese components, have supplies stocked up for the next 1-2 weeks; beyond that, if the supply situation persists, they could have to take production cuts in the range of 20-40 per cent.