Indian AC Industry To Double In Size By 2030, Says Blue Star's Thiagarajan
Thiagarajan said that the strong market growth in Q1FY25 was driven by a harsh summer and other reasons like the IPL and elections.
The Indian air-conditioner industry is expected to double in size by the end of this decade, according to B Thiagarajan, Managing Director, Blue Star.
Following a scorching summer that resulted in a robust June quarter for the air-conditioner maker, Thiagarajan predicts the air-conditioner industry in India is poised to grow from the current 14 million units to 30 million units in terms of volume by 2030.
Expressing satisfaction with Blue Star’s first quarter performance, Thiagarajan attributed it a harsh summer as well as the Indian Premier League and the general elections.
“I think we delivered exceedingly well in Q1. Before the season, I had predicted a 25-30% growth, and we were surprised to see growth of 40% in the last week of March, 70% in April and another 70% in May. It tapered off in June, but overall it was more than 55% growth," he said in an interview with NDTV Profit.
Overall, he said the unrelenting summer saw a surge in demand across the air-conditioner industry. "It is a happening industry and, from now on, the growth will be significant. We anticipate that the market size will increase from 14 million this year to 30 million by 2030,” he said.
Thiagarajan said Blue Star could not keep pace with demand this summer. “I don’t think we could have grown faster than the market this quarter. We were very clear that it would be a 25-30% growth, we could have managed another 5% at best. But, in March itself, we had to exhaust what was planned for April," he said.
It was a golden summer for different reasons. There was the IPL, there was election season and summer was very hot. We were excited to fulfill the demand. But, somewhere in mid-May, we couldn't catch up. There could be players and other brands who have filled in the gap, but our growth was not more than that of the industry,” Thiagarajan added.
Thiagarajan emphasised on the growing demand from Tier three, four and five towns and how the company had repositioned itself to meet the spike in demand.
“More than 95% buyers are first-time buyers, and the penetration levels in rural areas today is around 7%. It is expected to more than double in the coming years. Air-conditioners are not one per home, there can be multiple ACs in a household," he said, adding, "This summer, more than 55% buyers bought ACs through consumer finance, and 65% of the sales was from Tier III, IV, V towns. More than 80% are entry-level products, and 3-star, 2-star ACs account for more than 70% consumption.”
Thiagarajan said affordable products were key to success in the Indian market. "In India, if you have to succeed, you need to have affordable products and, therefore, we repositioned ourselves to offer that. At the same time, India is a market where a lot of things coexist. You cannot ignore affordable premium or premium segments as well."
The Blue Star's managing director expressed confidence that the company was well-prepared to meet the demand of rural India in the upcoming festive season, which usually sees a surge in demand. He reiterated the company would reach 15% of the market share by March 2026.
