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After
three years of a good run, 2008 has proved to be a tough period for the Rs.
25,000 crore consumer durable industry. Consumer durable prices across segments
are its lowest in the country since the past five years. Despite the recent
hike in input prices, companies were not able to pass on the hike to consumers.
In spite
of that sales of consumer electronics (CTVs & audios) have dipped by over
20 per cent, industry heavyweights are worried over the fate of home appliances like
ACs and refrigerators this summer. Industry watchers say consumers are shying
away from purchases especially in the wake of depressed stock market trends.
What is worrying industry officials is that the pace of growth has slipped in
both the high-end and low-end of the market.
The
biggest casualty is the CTV segment which constitutes the biggest chunk of
durable sales at 60-70 per cent. Price erosion too has been the sharpest in this
segment especially in the high-end segment.
As
reported by Economic Times, V Ramachandran, LG Director (sales & marketing)
said, "There are clear indications of a slowdown in the consumer electronics
segment. We are hoping that demand for home appliances should be better. Consumer
electronics has taken a hit in the absence of any major event to push sales. As
the largest player in the market, we are taking proactive steps to draw
consumers into showrooms to make purchases."
The
Korean heavyweight is pumping in big money on the eve of its 11th anniversary
to offer huge freebies and gifts on any LG brand purchases. The company is also
on a major after-sales service drive offering to reach a consumer within 24
hours of logging a complaint and fixing it at the consumer's convenience.
Although
modern formats like Croma and Next are reporting better sales compared to the
smaller traditional formats, manufacturers attribute it to their faster rate of
expansion.
There has
been no major event in the recent past to weave any excitement among consumers
for durable sales. Dealers are hoping that secondary sales - dealer to consumer - should pick up after companies step up discounts and promotional offers to
clear up existing inventory levels. Durable majors like LG, Videocon, Philips,
Onida and others are understood to have pruned production and imports by 22-25 per cent
since the last quarter of 2007. Currently, 60 per cent of the domestic demand is met by
local manufacturing and the rest through imports.
With
ICICI Bank and Bajaj Finance stepping up financing, consumers have started
buying smaller items like mixers, irons and toasters. Companies, on their part,
have stepped up promotions and discounts to rev up sales.
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