LG Electronics expects India to remain its top market for residential air-conditioners with strong growth in the segment expected to be fuelled by lower penetration and higher disposable incomes, a senior executive said. The South Korean consumer durable major said it is strengthening its market leadership in the India market through a locally optimised HVAC (Heating, Ventilation, Air-Conditioning) sector, especially with the third factory now coming up in Sri City. For the overall HVAC sector, India is among the top three markets right now.
Speaking to reporters recently, Kiyoon Seong, Head of ES Asia/ India said, “India’s AC penetration has grown to 12 per cent today, from about 7 per cent a year ago. Air-conditioners are no longer considered to be a luxury, but an essential product in the country. India has a large population, but the penetration of air-conditioners still remains low. For Room Air-Conditioners, India is already the largest market in terms of sales volume, and we expect this trend to continue because the market still has significant growth potential.”
In terms of the overall HVAC business, India is among the top three markets. “There is a lot of room for growth in the commercial air-conditioning business. India is one of LG’s key strategic markets globally. That is why LG established its third manufacturing facility in India to strengthen local production and support future growth,” Seong noted.
Currently, the company operates manufacturing units in Noida and Pune, with a new facility coming up in Sri City. The company said the third facility will not only support Southern India supply, but also global exports and a future ‘Made-in-India’ strategy for residential air-conditioners.
Seong pointed out that the company is also focusing on AI-based features in the RAC line-up through the R&D lab in Noida. “The company is also preparing a new RAC line-up with bigger indoor units, enhanced cooling capacity and innovative designs to meet evolving Indian consumer needs,” he added.
Responding to a query on the impact of the ongoing geopolitical conflict, Seong said component costs have increased. AC makers have had to take at least three rounds of price hikes this year due to new BEE ratings, as well as raw material costs.
“We are seeing cost pressures, particularly from compressors, heat exchangers and other key components required for higher-efficiency products. This is not unique to LG and is affecting manufacturers across the industry. The Indian market has experienced AC price increases in recent years due to higher commodity costs, including copper, aluminum and petrochemical-based materials. Although raw material costs have risen significantly, LG continues to work on reducing costs wherever possible,” he added.
(The writer was recently in Seoul at the invitation of LG Electronics India)