Room AC market to grow at 13 percent CAGR for next 5-6 years

Rising disposable incomes and better availability of electricity will augur well for the domestic room air conditioner market that will continue to grow at 12- 13 per cent CAGR for the next 5-6 years, a report said. The room AC market at present is estimated to be around Rs 11,600 crore. 

“Given the growth in disposable income, better availability of electricity, higher propensity to spend coupled with hot and humid climatic conditions, we believe the room AC segment will continue to grow at 12-13 per cent CAGR for the next 5-6 years. “Government spending towards urban infrastructure and transportation coupled with the expected recovery in the commercial real estate market will support project segment growth,” an ICICI Securities report said. 

It noted that within the room AC market, the share of inverter ACs is expected to rise as consumers would prefer the energy efficient option. “Relatively higher energy consumption of room AC compared to other household electrical appliances will prompt consumers and government towards energy efficiency. We expect the contribution of inverter ACs to grow at a faster rate compared to fixed-speed compressor AC with the former’s share estimated to increase from the current 13 per cent to 50 per cent over the next five years,” it said.

It added that the government’s energy efficiency programme will accelerate adoption of inverter ACs while keeping pricing competitive.