Domestic Appliances Industry

Overview

The domestic appliances industry in India is one of the fastest growing industries in India which has been experiencing double digit growth for several years and given it’s low penetration rates and increasing use of consumer durables by the rural population have established India’s as an untapped market space. Currently, 65% of revenues are realised from urban markets. Rural markets are expected to grow at a CAGR of 25%.  Some of the biggest names in the consumer appliances in India are Whirlpool, Bajaj Electricals, LG and Videocon.

Product Segmentation

Domestic and Global Outlook

The outlook for this industry is largely optimistic and is expected to be one of the best performing industries in the country over the next 10 years. In this industry, refrigerators have the highest penetration level, with 31% penetration. It holds a leading position in terms of market size within the consumer appliance industry and is expected to grow phenomenally over the next five years.

 

Air conditioners are another important product in this industry and with rise in incomes and standard of living, the demand for air conditioners (which are high-end products), is set to rise. The room air-conditioning market represents approximately 50% of the total market, with the other 50% comprised of central and specialist air-conditioning systems. As of 2013, penetration levels if air conditioners stood at a meagre 7% in India, compared to 53% in China, 72% in Singapore and 50% in Korea.

 

Washing machines are the second largest contributors to the consumer appliances market with 7.5 million units of sale in 2013.  

The market size of washing machines is set to grow at an exceptional rate of 17.1% per annum and is expected to rise to INR 140 billion by 2016. Currently, LG Home appliances is the leader in this space with 25% of market space and Samsung holds the second place with 23.2% market space.

 

Other products in this industry are also expected to rise at double digit rates.  Ease of operation and convenience of mobility of standalone microwaves have resulted in dominated almost all microwave sales till 2014. LG and Samsung hold the first two positions with 32% and 22% market share respectively, followed by Whirlpool and Bajaj electrical who have 11% and 10% market share respectively. Coming to refrigerators, the market share of direct cool and frost free segment is 76.3 per cent and 23.7 per cent respectively. Key growth drivers are lower prices and rising demand for frost-free refrigerators. Fridges with a capacity range of 142-340 litres dominated fridge sales over the review period, representing 74% of total volume sales. Again, in this segment, LG and Samsung are dominant with 24.55 and 20.6% market share respectively.

Future Potential

The current high growth of the Indian economy at over 7% coupled with expected increase in industrial production as a result of the ‘Make in India’ campaign, the demand for domestic appliance is all set to increase. As stated before, low penetration levels make India a hot spot for consumer electronics and appliances companies.

 

As of 2013, the rural market is expected to grow at a CAGR of 30% which makes this industry potentially very profitable for probable new comers. Rising incomes of individuals, job growth and the speedy development of Tier II cities are big wins for this industry. The residential segment dominates the market under all product segments and therefore, the smart cities project is another venture that can be a big boon to this industry as it would result in the increase in employment and hence increase household expenditure on household appliances. Besides this, when each segment is considered separately, washing machines and microwaves are leaders in future growth with 17.1% and 16% annual growth respectively. This followed by the demand for refrigerators which is growing at 8% per annum and air conditioners, which are growing at 7% annually.

 

This therefore, highlights the latent potential that exists in the Indian market and serves as an immense opportunity for companies and new-comers in the consumer appliances industry.

What this report contains:

  • A detailed overview of the industry

  • Structure of the industry from both, domestic and international perspectives

  • Related industries that this industry has inter-dependencies with and their understanding

  • Detailed analysis of industry segments in terms of the value and depth of corresponding market

  • Analysis & insights about the elements and critical success factors of this industry using strategic models

  • A forecast on the state of this industry in 2021, predicting the growth and movement patterns for 2016 - 2021

  • Our professional analysis on the future of the industry based on strategic actions adopted by major industry participants analysis and their key strategic initiatives

  • Quantitative estimates and forecasts of the growth prospects of the industry using revenue and financial forecasting models and Valuations of major players of the market

www.ngeninvest.com optimized for & best viewed in Google Chrome & Mozilla Firefox at standard resolutions.