Raw material prices soared, and air conditioning manufacturers rose in the peak season to fight for services

With the maximum daily temperature in South China exceeding 30 °C in recent days, the domestic air conditioning peak season market has also been officially launched. Due to the increase in raw material costs and the impact of the epidemic, price increases, equipped with fresh air technology, and service competition have become the trend of this year's air conditioning peak season market.

According to the latest data released by Industry Online, in April 2022, the production of household air conditioners increased by 5.4% over the same period last year, and the growth of air conditioning production was mainly driven by the peak season effect, especially in the domestic market, and the April scheduling increased by 14.9% over the same period last year.

High costs curb "price wars"

A person in charge of the Gree air conditioning south China specialty store told the first financial reporter that the price of upstream raw materials soared this year, and the supply price of air conditioners has increased. Gree from April 1, the unit price of air conditioning specials increased by 100-200 yuan, the price of conventional machines, high-end machines has not changed, continue to play the "service card" of ten years warranty.

Although the growth rate of the domestic home air conditioning market has slowed down significantly in recent years, this person is still cautiously optimistic about the market in 2022. He said that the weather in Guangdong is hot early, the end of March has entered the peak season of air conditioning demand, new, decoration, catering have air conditioning orders, Gree in March to push a 50% discount cleaning air conditioning activities, April to do "early May Day grab Gree" activities.

The pandemic has also brought uncertainty. The person said that even if there is demand in the sealing area, the air conditioner cannot be sent in. A familiar merchant in the Baiyun District control area, can only close down. In addition to air conditioning, Gree is also pushing fresh air products to purify the air.

The challenges did not hinder the enthusiasm of new entrants. On April 12, the headquarters and the Shunde Meibo Group, Chuangfu Group jointly released Zhengye air conditioning, and Gan Jianguo, general manager of Meibang (Guangdong) Electrical Appliance Co., Ltd., a subsidiary of the trader Meibo Group, revealed to the first financial reporter that fresh air conditioning will be launched as soon as possible.

Gan Jianguo said that the price of raw materials is rising, the structure of air conditioning products is changing, and fresh air conditioning to meet health requirements has become a trend. At present, the overall air conditioning industry has increased prices by 15%-20% compared with February; some areas have stagnated due to the impact of epidemic logistics, and it is expected that there will be a new round of sales boom in air conditioners in May, and retail prices will have 5% more room for price increases than in March and April.

However, Xiao Youyuan, chairman of Sanyou Technology, analyzed to the first financial reporter that the price of bulk raw materials such as steel, aluminum, plastic, and copper did not increase significantly compared with the previous quarter in April this year, but the compressor manufacturers raised prices by 3-5 percentage points and imported electronic materials had upward pressure on prices. However, the epidemic has had a certain impact on the domestic supply chain and labor shortage, indirectly increasing the cost of air conditioning manufacturing. At present, the export situation is still good, and there may be changes in the second half of the year, and there will be pressure.

"Trade-in" activates stock demand

The demand for air conditioning replacement needs to be activated, and the product and operating costs have risen, so that manufacturers, channels and service outlets have shifted the focus from price competition to service competition.

According to the total data of Aowei Cloud Network (AVC), the domestic retail sales of air conditioners in 2021 were 152.7 billion yuan, down 1.2% year-on-year; the retail sales volume was 46.89 million units, down 8.7% year-on-year. The air conditioning market is in a state where the recovery of the air conditioning market is not up to expectations at a low base.

At the same time, there is a lot of demand for replacement in the Chinese market. According to the standards promulgated by the China Household Electrical Appliances Association, the safe service life of air conditioners is 10 years. Ten years ago, in 2012, the policy of home appliances going to the countryside was implemented. This means that a large number of air conditioners with home appliances in the countryside have reached the safe service life, and it is expected that about 50 million air conditioners will reach the safe service life in 2022.

At present, China's air conditioning market has entered the competition of the stock market, and a large number of potential renewal demand needs to be released. Trade-in has become a common choice from manufacturer to merchant activation market. At the end of March this year, Midea launched the green recycling action of waste home appliances, for four types of major appliances such as air conditioners, regardless of brands, providing green recycling and replacement subsidy services, which can be dismantled, sent and installed synchronously.

At the same time, the channel side has also launched various "old-for-new" policies. From Jingdong's point of view, "old for new" covers the channel self-operated air conditioner, and launches the air conditioner demolition and send new synchronous service, purchases designated products to give away cleaning or 365 days only to change and repair; in 2022, it will also upgrade the service with the air conditioning brand, launch a new model of price exchange, and users can complete the replacement service in just a few seconds on the e-commerce platform, enjoy at least 300 yuan of old machine subsidies, in order to stimulate the demand for renewal and promote the growth of the stock era.

From 2022 onwards, the China Household Electrical Appliances Service and Maintenance Association plans to spend three to five years or more to organize and carry out the activity of "100 cities and thousands of townships and thousands of households to benefit the people to collect the old and rejuvenate the trend", and the scope of collection includes four major appliances and computers such as air conditioners recovered by the national policy subsidies. The campaign will start in early May and is expected to cover 20 provinces and cities across the country.

Liu Xiumin, chairman of the presidium of the Council of the China Household Electrical Appliances Service and Maintenance Association, said that the government and manufacturers will provide a certain amount of subsidies to encourage consumer participation, hoping to combine new products, awakening concepts and new scenes to promote the renewal of home appliances.

Fresh air conditioning also has a huge room for improvement

How to enhance the added value in the competition of incentives is what the upstream and downstream of the air-conditioning industry are thinking about, and the new wind is undoubtedly a new outlet.

Hisense Home Appliances (000921. SZ) total operating income in the first quarter of 2022 was 18.304 billion yuan, an increase of 31.35% year-on-year, and net profit attributable to the mother was 266 million yuan, an increase of 22.1% year-on-year. And the Japanese three electric companies, Hisense home air conditioners and commercial air conditioners to strengthen production and technical synergy, Hisense air conditioners this year insisted on fresh air products to increase value-added and share, which helped its performance improve.

Midea, Gree, Haier, TCL, etc. are also increasing the promotion of fresh air conditioning. According to the online monitoring data of Aowei Cloud Network, from 2019 to 2021, the number of participating brands of domestic fresh air conditioners increased from 4 to 10, and the number of models on sale increased from 26 to 123. The fresh air air conditioning market is growing rapidly, with online sales of 820 million yuan in 2021, an increase of 492.7% year-on-year; offline sales of 1.91 billion yuan, an increase of 57.4% year-on-year.

The significant increase in the penetration rate of fresh air conditioners began in 2020, and due to the NEW Crown Pneumonia epidemic, people pay more attention to health and air quality. Aowei cloud network online monitoring data shows that the retail volume of fresh air conditioning categories will account for 0.06% in 2020, and the retail sales volume of fresh air conditioners will account for 0.63% in 2021. From the product point of view, the fresh air volume of fresh air conditioners has gradually increased. From the perspective of potential, the penetration rate of fresh air conditioners has great room for improvement.

Xiao Youyuan believes that the fresh air conditioner is creative, but if the fresh air volume is large, it is easy to produce noise; and the ventilation duct is small, and the filter network basically needs to be replaced for one month, bringing follow-up costs. Therefore, the current technical solution needs to be further improved.

In the view of Zhao Weimin, secretary general of the China Home Appliance Marketing Committee, the number of air conditioners per 100 residents in domestic townships is less than 80 units, and the number of air conditioners per 100 residents in cities exceeds 120 units, so the air conditioning market still has room for growth. In 2022, the air conditioning market is expected to stop falling and rebound, the cost will remain high will maintain the price level, and the product structure upgrade is conducive to the increase in sales scale.

Aowei Cloud Network predicts that China's domestic household air conditioning market will achieve good growth in 2022, with sales of 166.5 billion yuan and sales of 50.52 million units. "The entire industry still needs leading enterprises to stabilize the market and reasonably price, and at the national policy level, it is also necessary to prevent vicious competition, do a good job in market product supervision, promote technological innovation and benign competition in quality, avoid blindly low prices to lower the technical level and product quality of the industry, damage consumer rights and interests and the reputation of Overseas Markets for Chinese air-conditioning products." Xiao Youyuan reminded.