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Text | Liu Junhong
"No, air conditioners can also be out of stock?"
After experiencing several days of high temperatures at the end of June, Xiao Luo really couldn't bear the old air conditioner in the room that cooled slowly and loudly. As soon as I opened the shopping software, I found that the products of the two major brands of Midea and Gree were out of stock.
The hot sales of air conditioners are not only reflected in the difficulty of purchasing, but also in the long time to install.
"There is a queue for door-to-door installation, and waiting for 4~5 days is considered fast. I now pack 10 a day, and I can't fit any more. An air conditioner installer told Business Data Pie.
Part of the reason for the hot sales of air conditioners is due to the hot weather.
According to data from a climate analyzer provided by the University of Maine in the United States, the average temperature of the earth reached a record high of 17.23 degrees Celsius on July 6.
Although scientists currently have accurate temperature records in short of a hundred years. But Francis, a senior expert at the Woodwell Climate Institute in the United States, believes that this week (July 3-July 9) is likely to be "the hottest week in 100,000 years."
The sluggishness of the overall home appliance industry has further highlighted the popularity of air conditioning sales.
The expected recovery in consumption in early 2023 has not materialized as expected in the broader market in the home appliance sector. According to data from the National Household Appliance Industry Information Center, the cumulative sales of the domestic home appliance market in the first quarter reached 146.4 billion yuan, down 4.9% from the previous year.
In contrast, in the first quarter, domestic shipments of air conditioners reached 22 million units, and shipments reached a record high in the first quarter, an increase of 17% over the same period last year. Domestic sales of air conditioners in April and May still maintained a bright performance. Among them, domestic sales in April increased by 29.7% year-on-year, and domestic sales in May increased by 19.7% year-on-year. Domestic shipments in April and May reached 10 million units, the highest shipment volume in the same period in history. Sales of air conditioners seem to be moving out of the independent appliance industry.
In the situation of continued tight sales of air conditioners, did the 618 promotion play a decisive role? Will this growth be sustainable in the future?
01 The promotion season is not strong, but it is still sold out
It is undeniable that the sales of air conditioners during the 618 period were quite strong.
During the 618 period of 2023 (May 29-June 18), the omni-channel retail sales and retail sales of air conditioners reached 11.95 million units and 41.1 billion yuan, respectively, corresponding to year-on-year growth of 36% and 38%. Among them, online retail sales and retail sales increased by 49% and 54% year-on-year, respectively, leading the growth rate in various categories of home appliances.
But the boom in 618 sales may have little to do with promotion. Overall, the discount of air conditioning products in 618 is relatively limited. Moreover, many brands have reduced prices before, no less powerful than 618 promotions.
Taking Jingdong's own price as a reference, the average price of Midea's air conditioner (based on the bedroom, 1 horse bigger, new level of energy efficiency) is 2349 yuan during the period of 2499,618, and the lowest price is 2309 (5.31 price, superimposed on Jingdong coupons). The overall discount is only 94% off. Similarly, on the side of Haier's products of the same level, the daily price of the product is about 2399 yuan. The reserve price of the 618 period is 2269 yuan (superimposed on Jingdong coupons), and the discount is also 94% off.
On Gree's side, because Gree's air conditioning gross profit margin is higher than Midea (32.44% in 2022 report Gree and 22.84% in Midea), it can theoretically support greater promotional efforts, but the overall range is also extremely limited. The daily price of Gree Yunjia is 2799 yuan, and the price on June 1 is 2549, equivalent to 91% off.
Through the promotion comparison of the products of leading enterprises, it can be confirmed that the 618 promotion in 2023 is not strong.
The air conditioner is on sale since April.
According to data from Oviyun.com, starting from 17 weeks of 2023 (from April 17), the growth rate of air conditioning sales and sales remained high, exceeding 100% for three weeks. In the second quarter of this year, the overall sales volume and sales of air conditioners increased by about 40%.
Reflected on the supply side, compared with 2022, air conditioners will also open up a new height on the production side in 2023.
According to industry online data, household air conditioner production in June was 17.36 million units, a year-on-year increase of 33.6%. In July, the household air conditioning industry scheduled production of about 16.13 million units, an increase of 29% over the same period. Compared with 2022, the production schedule in 2023 can be seen that since April, this year's air conditioning production volume is also significantly higher than last year.
Higher production schedules show that companies continue to have strong confidence in air conditioning sales. But can such confidence be sustained?
02 Can high sales be sustained?
Generally speaking, the home appliance industry is considered to be strongly related to the real estate boom. However, compared with the performance of washing machines, refrigerators, color TVs, and range hoods, the growth of air conditioners is "unique" and has come out of the growth of other home appliance industries.
According to data from the National Bureau of Statistics, since March this year, the cumulative sales area of commercial housing (residential) in the mainland has begun to return to positive year-on-year, with 1.4% in March, compared with -18.6% in March 2022. However, the reversal of real estate is not reflected in the entire home appliance industry, with 2023W25 as the node, with offline sales statistics, air conditioners increased by 8% year-on-year, range hoods increased by 3% year-on-year, while refrigerators, washing machines and color TVs decreased by 6%, 11% and 13% respectively year-on-year.
Far beyond the market of other major appliances, behind the metaphor of the air conditioning replenishment cycle, but also means a new round of opportunities for the industry.
In the air conditioning industry, the inventory cycle includes four stages: active destocking, passive destocking, active replenishment and passive replenishment. In the cycle of high inventory, leading companies in the air conditioning industry will take the initiative to inventory through price wars to increase market share, so as to wait for the next demand upward cycle to rise in volume and price.
In the last active destocking cycle, Gree opened a price war in September 2014, and the average price of the industry continued to decline to February 2016. In the summer of 2016, due to the El Niño phenomenon, the average summer temperature of that year exceeded the reference value of previous years by 0.81°C, which was the third highest in history at that time. As a result, air conditioning sales broke out unexpectedly in 2016, and the annual retail sales of air conditioners soared by 18%. Subsequently, the average price of the product began to rise moderately, and the trend continued into 2017.
The beginning of this round of destocking cycle is the price war launched by Midea in 2019, and the average price of the industry once fell by 30%. Coupled with the impact of the epidemic in the first half of 2022, air conditioning retail was greatly affected. Omni-channel retail sales were -15% year-on-year (AVC caliber), while domestic sales shipments were only -0.1% year-on-year (industrial online caliber), and channel inventory was high. After experiencing active destocking, the hot summer of 2022 once again stimulated the demand for air conditioning. As a result, the inventory of both factories and distributors is lower than the same period in history, and a total of about 10 million units of inventory will be consumed in 2022.
The willingness of channels to purchase goods is high, and even in the current shortage of goods, many channel merchants will take risks to purchase goods from "channeling merchants".
"Now the air conditioner is selling too fast, the purchase can't keep up, I need to 'want' from somewhere else." A channel vendor in Guangxi told Business Data Pie.
In the future, driven by demand and cost, the market of supply and demand will continue for some time.
On the one hand, hot summer is the main logic of air conditioning consumption, and the weather in the coming years may be hotter than this summer. According to an assessment report released by the World Meteorological Organization in May, at least one of the five years from 2023 to 2027 will break the high temperature record set in 2016, with a probability of 98%. The probability that the average temperature in these five years is higher than in the past five years is also 98%.
On the other hand, the prices of the main raw materials for air conditioners (copper, steel, aluminum, plastic) are falling back compared to 2022. Among them, steel, copper, plastic and aluminum accounted for about 60% of the cost of air conditioning raw materials (25%, 20%, 10% and 5% respectively). As of June 20, 2023, LME copper/LME aluminum/HRB400 rebar prices are down 9.5%, 16.7% and 14.0% from the year's high, and 20.4%, 44.9% and 25.6% from last year's high. The decline in the price of materials is expected to continue to improve the cost pressure of the air conditioning industry.
The improvement of the cost side has further promoted the willingness of air conditioning manufacturers to expand production, and they have raised their previously planned production schedules. According to the data of Oviyun.com, the total planned production of air conditioning enterprises in July 2023 was 14.83 million units, of which 10.52 million units were scheduled for domestic sales, a year-on-year increase of 30.9% (up 25 percentage points).
However, under the dual benefits of cost and industry cycle, the biggest beneficiary is not the "three giants" of Midea, Gree and Haier. Wild lilies also have spring, and an opportunity for second-tier manufacturers is quietly blooming.
03 Growth opportunities for second-tier manufacturers
Opportunities for air conditioning sales, though part of the home appliance company's offerings. However, the outbreak of product lines can also show the trend of changes in the competitiveness of the company's products.
To compare the company's product sales competitiveness, you can use (accounts receivable + contract assets) / total assets as an indicator to determine whether the company's money for selling products is fully recovered. The ratio is less than 1%, which means that the company's products are selling well; More than 1% and less than or equal to 3%, representing the best-selling of the company's products; More than 3% less than 10%, the company's product sales are average; More than or equal to 10%, less than 20%, the company's products are more difficult to sell; More than 20%, the company's products are difficult to sell. Since Oaks is not listed separately, we choose Gree, Midea, Haier, TCL, and Hisense for horizontal comparison.
As of the first quarter, the product sales of Gree, Haier and TCL were better than those of several others, and the product sales of Midea and Hisense were more difficult. From the perspective of the change trend, Haier has increased slightly, and the difficulty of sales of Midea products has changed significantly, up 2.68 points compared with the whole year of 2022. Gree, TCL and Hisense were relatively stable, with ratio changes of -0.28, 0.24 and 0.71 points, respectively.
Among the "Big Three" of home appliances (Gree, Midea, and Haier), Midea has changed greatly, or because of the diversification of its product lines. The boom in air conditioning in 2023 cannot offset the decline of the overall home appliance industry.
The competitiveness of Gree products continues to be good, which is related to the product competitiveness and main business focus accumulated over the years. Gree air conditioning revenue accounted for 88.05% (2022 annual report). In 2021, Gree also proposed a ten-year repair policy.
Haier's side, although it is also affected by the downturn of the overall home appliance industry. However, due to the company's strategy gradually focusing on high-end (Casati) and whole-house solutions (three-winged bird), the overall impact is small. On the air conditioning side, Haier is gradually exploring a differentiated way to gradually cultivate consumer reputation at the terminal, and gradually allows consumers to personally accept the technology and differences of its high-end products in the store.
However, in the market since 2023, compared with Gree, from the perspective of air conditioning sales growth, the largest growth benefit of this round of air conditioning is actually second-tier manufacturers.
Since March, second-tier manufacturers have shown a growth trend far beyond the leader. In March, domestic sales of Midea and Gree increased by 11.54% and 15.69% year-on-year. Among the second-tier brands, domestic sales of Oaks, TCL, Changhong and Hisense increased by 46.55%, 40.0%, 100.0% and 30.95% year-on-year.
Reflected in the market share, the domestic sales of CR3 (Gree, Midea, Haier) from January to May 2023 were 70%, a year-on-year decrease of 4.7 percentage points. Second-tier brands such as TCL have actively expanded production since the end of 2022, and the domestic market shares of Oaks, TCL and Hisense from January to May 2023 were 7%, 5% and 5%, respectively, an increase of 2.0, 0.8 and 0.4 percentage points year-on-year, and their share increased significantly.
In the future, second-tier manufacturers are expected to stabilize this new market share.
On the one hand, China's air conditioning market is still not saturated. The Chinese market is still in the process of popularizing the penetration of one household and multiple machines, and there is still a large penetration rate space compared with Japan. In the past three years, due to the significant extension of home time, the rigid attribute of air conditioning for living comfort has gradually been perceived by consumers. From the perspective of the number of 100 households of household air conditioners, the number of air conditioners in urban and rural households in China in 2022 will be 164 and 92 respectively. There is a big gap between the number of households with two or more people in Japan (282 units per 100 households in 2017). If China's air conditioning penetration rate will be benchmarked against Japan, the urban market alone has 70% room for growth in the penetration space.
On the other hand, in addition to the basic market of penetration, the replacement demand from the last round of large-scale home appliances to the countryside (2008-2012) is prominent.
According to the "Detailed Rules for the Service Life of Household Appliances", the general life cycle of home appliances is about 10 years, and the last round of large-scale home appliances to the countryside has long been more than 10 years ago. According to the calculation of China Merchants Securities, the social ownership of air conditioners in mainland China is 540 million units, corresponding to the simple population distribution, and the total ownership of the sinking market is about 200-300 million units. If 10% of the replacement demand can be released, the corresponding demand will be 20-30 million units. In 2022, the total shipment volume of the mainland air conditioning market will be about 83.15 million sets. Demand from replacement will add another 25% increase to total sales.
The broad demand has laid the foundation for second-tier air conditioning brands to exceed expectations. Driven by the upward trend of costs and cycles, the air conditioning industry is expected to usher in a "golden period" again.
After a week of hard work, Xiao Luo finally waited for the new air conditioner to be installed. Blowing the cold wind of the new air conditioner, Xiao Luo felt the "rest of his life after the disaster" and made up his mind: "This summer, let's nest in the bedroom to make ends meet." When the weather cools, the one in the living room will have to be replaced quickly. ”
#Beauty Grign Hel# #Air Conditioning # #高温#
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