Will air conditioning prices continue to rise in 2022?
Recently, some small and medium-sized air-conditioning manufacturers issued price increase notices. Guangdong Meibo intelligent environmental equipment Co., Ltd. (hereinafter referred to as “Meibo”) and Jiangsu Xinke Electric Appliance Co., Ltd. (hereinafter referred to as “Xinke”) have successively announced that the price of air conditioning will rise by 5% – 8% and 3% – 5% respectively from January 1, 2022.
“We have received the notice of price increase. The price has increased since January 1, and each air conditioner has increased by 80 yuan.” On January 7, the relevant person in charge of Xinke air conditioning told the times weekly.
Moreover, on January 6, the reporter of the times weekly visited a store of Gome in Shanghai. Several salespeople of the store said that the prices of Gree and Mitsubishi air conditioners have increased, and Haier, Midea and other brands will also adjust the prices soon.
At present, Gree, Midea and Haier have won more than 70% of the market share, leaving little market space for small and medium-sized manufacturers. As prices rise, the bargaining power of these brands is limited, and their living space is further reduced
multiple price increases
“In May 2021, air conditioning prices experienced a wave of rise. In July, Gree’s prices rose by 10%, and after the double 12, they rose by 10%.” A salesperson at the Gome store told the times: “Gree is not the only one who has increased the price. Today (January 6), the price of Mitsubishi air conditioner increased by 10%.”
Two other salespeople of the store said that Midea and Haier would also raise prices before and after January 15.
On January 7, the reporter of times weekly contacted Gree, Midea and Haier respectively. Midea staff said that they had not received the price increase notice, and Gree and Haier had not replied yet.
According to media reports, in the notice issued by Meibo and Xinke, the price increase factor includes the sharp rise in the price of raw materials. Xinke also emphasizes the impact of energy consumption control on production and manufacturing costs.
On January 7, the reporter of times weekly called Meibo, and the staff said that they were not clear about the price rise.
“The price increase is decided by the factory, and the specific situation can\’t be explained to us. We also increased in May last year.” The person in charge of Xinke air conditioning said.
“The price of air conditioners did rise in 2021, because the price of raw materials rose too much, and the prices of plastic, copper, iron and other raw materials used in the production of air conditioners were rising, so the prices of all brands of air conditioners had to rise.” The above Gome store salesperson said.
In this regard, Suning.Com Co.Ltd(002024) a store manager in Shanghai also expressed the same view to the reporter of the times weekly. “The price of air conditioners has not decreased since the rise in May last year, but the current price of air conditioners in our store is the same as that in the double 11 and double 12 periods. The prices of raw materials for air conditioners are rising, such as copper.”
In fact, the price of raw materials has shown a downward trend recently, but it still takes some time to transfer to the terminal market. The Research Report of open source securities shows that the price of raw materials of household appliances has decreased month on month recently, and it is optimistic that the price of raw materials will fall and the cost will improve.
“From May 2021 to now, the fundamental reason for the rise of air conditioning prices lies in the increase of raw material prices. In fact, the price of air conditioning raw materials has been rising since 2020.” On January 7, Hong Shibin, an analyst in the home appliance industry, told the times weekly: “but by the end of 2021, the price of raw materials has been stable and even declined to a certain extent, so it is difficult to increase the price of air conditioning in 2022.”
Hong Shibin believes that labor costs and market environment are not enough to support enterprises to raise prices again, but the export situation of air conditioners is different, and the price is related to overseas purchasing power and freight prices
it is difficult for small brands to survive
The rise of air conditioning prices will have little impact on large brands, but it will have a great impact on small brands. At present, Gree, Midea and other big air-conditioning manufacturers occupy most of the market share, and small brand air-conditioning manufacturers are struggling to survive.
According to the data of China business intelligence network, from January to September 2021, the top three enterprises in the air conditioning online market retail sales are Gree, Midea and Haier, with market shares of 31.2%, 30.4% and 10.9% respectively, and the market shares of the three enterprises are as high as 72.5%; Midea, Gree and Haier are the top three enterprises with retail sales in the offline market, with market shares of 35.6%, 33.3% and 14.6% respectively. The three enterprises have won a total market share of 83.5%.
In the weekly express of air conditioning online and offline recently released by ovicloud, Meibo, Xinke and other brands are not included in the statistics of retail sales share of top brands.
“Now there are more consumers who buy Gree and Midea, and we really can\’t find small brand air conditioners.” The salesperson of the above Gome store sighed to the reporter of the times weekly: “for example, Chunlan air conditioner was very famous in the past, which was louder than Gree and Midea, but later Chunlan air conditioner slowly declined.”
The squeeze of big brands and the rise in the price of raw materials make the survival of small brand air conditioning manufacturers worrying. The price increases of Meibo and Xinke may be the measures taken by the company to improve profits. The problem is that the premium power of small brand manufacturers is weak, and it is difficult for consumers to pay for the price rise.
“The price increase will certainly have an impact on the sales of air conditioners, which makes the enterprise face the problem of whether to sell the scale or profit. If the price has been so low, the manufacturer may have no gross profit. The enterprise will feel which is more important in the process of operation.” Hong Shibin said.
Moreover, with the decline of the real estate industry and the decline of consumers’ purchasing power, the current overall air conditioning market is in a downward trend. Gree, Midea and other home appliance giants have diversified and expanded one after another, looking for new incremental markets. The financial strength of small and medium-sized air-conditioning manufacturers is limited, and it is difficult to invest in diversified development on a large scale in the short term. Whether the price of air-conditioning rises or not, it seems difficult to solve the development dilemma.
(source: times weekly)
