Early arrival of rains means bleak forecast for sales of air-cons

Every year the arrival of the hot season has the faces of air-conditioner sellers beaming but the unexpected change in weather conditions this year has given them a less sunny disposition.

No matter how much they have invested in marketing campaigns and new models, the market has gone cold.

Three major players - Air Pansiam Engineering, which is the manufacturer of Central, Samsung Thailand and LG Electronics (Thailand) - have all missed their sales targets.

Samsung reported 8-per-cent sales growth, down from its earlier target of 20 per cent, while LG achieved only 20 per cent from its earlier expectation of 35 to 40 per cent. Central Air even experienced a 10-per-cent sales drop.

"This hot season has been shorter than usual. Instead of three months -  from March to May as usual - this year was only five weeks, from the second week of March to the third week of April. Then the rain came, so we had only five weeks to sell our air-conditioners," Pansiam's assistant managing director Pongwarit Sovittayasakul said.

The hot season usually generates up to 60 per cent of annual sales but this year sales were as low as 30 per cent.

Further clouds on the horizon are that the weather during the second half of every year, usually rainy and cool, never helps the market, and that combined with the chill winds of political uncertainty and the rising tide of living costs means there is little hope of enough sales to compensate for those lost last summer.

Manufacturing and operating costs are also rising, particularly oil and copper prices.

Some companies have revised down their forecasts. Samsung, for example, hoped to sell 120,000 units this year and now predicts only 95,000 to 100,000 units, according to the firm's manager of the air-conditioning division Somporn Jangreenapawong.

However, LG and Pansiam still maintain sales targets of Bt2.8 billion and Bt1.2 billion respectively, each with 10-per cent growth.

Samsung's strategy is to focus on maximising the ability of sales channels to attract more customers while relying more on sales to corporate clients such as real-estate developers, who are accelerating their construction to avoid higher building costs. The firm expects sales from project customers to increase from 12 per cent to 25 per cent by the end of the year. The balance will come from individual customers. The firm also plans to put more effort into marketing activities.

Meanwhile, LG's air-conditioner marketing manager Sinamet Im-Aim said the company planned to improve its channel management and to add more value to all its products. It will open extra stores with a focus on selling 40 per cent more through these outlets, mostly in upcountry areas, while improving displays at its dealers' shops. Installation knowledge among its sales force will be strengthened and two new models will be launched.

Both LG and Samsung will maintain their earlier planned marketing budgets for the year but Central Air has set a new budget of about Bt10 million to arrange co-promotions with its 400 dealers nationwide. Each dealer will be different according to consumer characteristics in each region. Central Air also plans to have more selling points in modern trade outlets. Whatever the weather, it will be a challenge for all players to reach their targets.