AC industry to register 19% CAGR growth for next 3 years, faces Compressor Shortage: Motilal Oswal
The Indian air conditioner (AC) industry is expected to register a robust 19 per cent CAGR growth over the next three years, driven by rising temperatures and increasing disposable income, according to a report by Motilal Oswal.
ANI
Mar 10, 2025 13:30 IST
New Delhi [India], March 10 (ANI): The Indian air conditioner (AC) industry is expected to register a robust 19 per cent CAGR growth over the next three years, driven by rising temperatures and increasing disposable income, according to a report by Motilal Oswal.
The report highlights that the industry has already witnessed strong demand in FY25, following a 12 per cent YoY volume growth in FY24, which saw sales of around 9.4 million units. Looking ahead, the industry is projected to grow at a compounded annual growth rate (CAGR) of 19 per cent over FY24-27, with a sharp 35-40 per cent YoY increase anticipated in FY25.
It said "In FY24, industry volumes grew by 12 per cent YoY to around 9.4 million units. We expect a 19 per cent CAGR in industry volume over FY24-27, with 35- 40 per cent YoY growth expected in FY25".
With the rapid expansion of the AC market, the demand for high-value components such as compressors and copper tubes is also expected to rise.
The report pointed out that nearly 80 per cent of the annual output od ACs in India occurs between December and June, contributing peak production during the period. Any disruptions during this crucial period can impact overall production volumes for Original Equipment Manufacturers (OEMs) and Original Design Manufacturers (ODMs).
It said "With annual AC demand growing at such a healthy pace, the demand for high-value components such as compressors and copper tubes would also grow correspondingly".
However, the industry faced a major hurdle in the third quarter of FY25 (January 2025) due to a shortage of AC compressors.
The report identified three key reasons behind this issue. First, the Bureau of Indian Standards (BIS) certification of a major Chinese compressor manufacturer expired, leading to a halt in shipments to India since October 2024.
Second, rising AC demand in China, driven by government subsidies, has resulted in supply constraints. Third, concerns over potential U.S. tariffs on Chinese exports have led to supply diversions to the American market.
The compressor shortage may have caused production losses for some AC manufacturers during this period. Given the increasing demand and production challenges, the industry will need to address supply chain constraints to maintain its growth momentum in the coming years. (ANI)
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