Heatwaves Drive Demand for Air Conditioning, Yet Sales Growth Slows
Despite a heatwave affecting northern and eastern India, the room air-conditioner (RAC) industry is bracing for a challenging second half of 2025. Sales surged in June due to the extreme temperatures, but unexpected weather patterns and rainfall have led major manufacturers to revise their growth forecasts down to a modest 10-15% for the year. This summer, typically the peak season for air conditioner sales, has left many companies feeling disappointed after initial optimism earlier in the year.
Industry Growth Forecasts Revised
The air-conditioning sector had initially anticipated robust growth, with some companies projecting increases of 25-30% year-on-year. This optimism was fueled by an early summer that prompted manufacturers to ramp up production and inventory. However, the reality has been starkly different, as unseasonal rainfall and fluctuating temperatures have significantly dampened demand. B Thiagarajan, managing director of Blue Star, expressed disappointment, stating, “We all had planned for a 25 to 30 percent growth, which is not going to take place. This is a disappointing summer; that is the truth.” He acknowledged the need to adapt and manage the situation moving forward, hinting at potential recovery during the festive season when consumers might take advantage of discounts on older models due to new energy rating norms.
Impact of Weather on Sales
The India Meteorological Department (IMD) has forecasted a drop in temperatures in mid-June, predicting cooler winds and thunderstorms from a western disturbance. This change in weather is expected to further impact air conditioner sales, as demand typically fluctuates with temperature variations. Pradeep Bakshi, MD and CEO of Voltas, noted that the industry has experienced minimal to negative growth over the past two months. He highlighted the challenges of recovering lost sales from April and May, stating, “Hitting last year’s number would itself be a challenge.” Despite these setbacks, Bakshi mentioned that a recent rise in temperatures in northern regions could provide some late relief for sales.
Mixed Signals from Manufacturers
Haier Appliances India’s President, N S Satish, provided a mixed outlook for the industry. He reported a year-to-date growth of 30% in RAC sales, although April and May saw a decline of 10-15%. June, however, has shown signs of recovery, driven by impulse buying spurred by the heatwave. Satish remarked, “If I compare June last year versus this year’s June sell-out, it’s almost now 20 percent plus to the consumer.” He acknowledged that last year was an unprecedented summer, and if the industry manages to grow despite the challenges, it would be a significant achievement. Overall, he estimates that annual growth will likely settle around 10-15%.
Competitive Landscape of the RAC Market
India’s room air-conditioner market is one of the fastest-growing globally, with approximately 12 to 15 companies competing in a sector estimated at around 15 million units. The current challenges faced by manufacturers highlight the volatility of the market, influenced by both weather patterns and consumer behavior. As companies navigate these difficulties, they remain hopeful for a rebound in sales, particularly during the upcoming festive season, which traditionally sees increased consumer spending. The industry’s ability to adapt to changing conditions will be crucial in determining its overall performance in the coming months.
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