Rapid urbanisation and growing per capita income have helped expand the middle class in Bangladesh, and a lot of consumer products once considered a luxury by this particular segment of the population have now gradually turned into must-have utility items.
Amid the backdrop of a gradual rise in temperatures, better affordability of air conditioners (ACs), and lower electricity costs owing to inverter technology have become key drivers of growth in AC sales across the country.
With the mercury hitting a scorching 42.6 degrees Celsius on April 20, air conditioners are now indispensable in households, workplaces, and institutions to combat the intense heat.
April and May are considered the peak seasons for AC sales, as nearly 90 per cent of the units are sold during this period. Amidst soaring temperatures and a relentless heat wave gripping Bangladesh, air conditioner (AC) sales have skyrocketed by double compared to normal times.
According to the Equity Valuation Report on Walton Hi-Tech Industries PLC, sales of ACs are expected to reach 0.5-0.6 million units and the market size is expected to expand to Tk 40 billion. The annual growth rate of AC demand has been around 20 per cent.
The AC market used to be dominated by foreign brands such as General, Hitachi, Panasonic, Singer, Samsung, and LG. However, local brands have turned the tide over the last decade and currently cover 70 per cent of the domestic market demand.
Walton, MyOne, Unitech, Transcom Digital, Vision, Jamuna, and Butterfly manufacture or assemble air conditioners locally. In local manufacturing, almost 70 per cent of the parts required are imported, which include compressors and other components.
Amidst concerns over a potential AC shortage due to prolonged heat waves, sellers brace for heightened sales in the coming weeks, as meteorologists predict higher temperatures to persist until the first week of May.
Bangladesh Refrigeration and Air-conditioning Merchant Association (BRAMA) President Mohammad Asaduzzaman emphasised the soaring demand for air-conditioning units saying, "Some shops are experiencing stock shortages due to the product's essential role in daily life.”
“We are ready to meet both domestic and international demands if provided with government support. Value Added Tax (VAT) exemption was the catalyst for both local and foreign companies in trying to adopt local manufacturing for air conditioners.”
He added, “We have to work collaboratively to propel the industry’s growth globally, drawing a parallel with the success of the Readymade Garments (RMG) sector. For that, we need to develop this industry further.
“We need tax reduction, access to low-interest loans, LC benefits, and the availability of skilled manpower.”
Presently, Walton, Electromart, Transcom, Esquire, Singer Bangladesh, Butterfly, RANGS, Electra International, Minister, Vision, and LG are manufacturing and marketing air conditioners in the country.
In 2021, Walton, Minister, Jamuna, and Vision invested heavily in the manufacturing of AC.
Hasanat, a salaryman at a private firm, was visiting the Walton Malibagh outlet to buy an AC. He said, “My flat is on the top of our building. Heat waves make our flat so hot that I am buying a 1.5-tonne AC for my bedroom and another 2-tonne unit for my dining room.”
Sumon, another buyer coming from Khilgaon, said, “It is so hot now that I have become used to the comforts of AC. I use AC all day in the office. So I am planning to buy one for my home.”
Air conditioners with capacities ranging from one to two tons remain popular for home use. However, there is an increasing preference for 1.5 tons inverter ACs, which is more energy-efficient and environmentally friendly.
Mohammad Mamun Mia, in charge of retail sales at Electro Mart, a company that markets Gree brand ACs made in China, said, “The demand for Gree in the AC market has always been high. However, AC sales have almost doubled in the last ten days due to the heat wave.
“Inverter air conditioners are in high demand as they are energy efficient. Now customers do not want to buy non-inverters. A Greer one-ton non-inverter AC is selling for Tk 66,990, and an inverter at Tk 69,990.”
Companies say that the price of AC has increased mainly because of the USD crisis for one and a half years.
The price of an AC unit has increased by Tk 10,000 to Tk 15,000. Depending on the brand, performance, and company, the price of these ACs ranges from around Tk 45,000 to Tk 1.5 lakh.
Md Shamim Mia, outlet manager of Walton Plaza, Malibagh, said, “AC prices have not been increased this season. It is still selling at the same price as it was 3 months ago. Rather, various opportunities, including discounts and money-back guarantees, are being offered to buyers.”
However, many cannot afford an AC, so they are buying air coolers as an alternative.
Mizanur Rahman, a private firm employee in Dhaka, said, “Children are unable to study due to the heat wave. So I thought I would buy an air conditioner. But the prices are too high for me, so I will buy an air cooler.”
Meteorologists say that the temperature will remain high till the first week of May. Under the circumstances, sellers hope that AC sales will increase further.
However, a prolonged heat wave will make the demand for ACs soar even more, and this in turn would cause a shortage in the market.
