Since the beginning of the new year, the air conditioning market has been bustling: promotional activities have been launched in advance, new products have been released one after another, new factories have been put into operation, and news of new base construction has continued. What is even more noteworthy is that this year, the heat of air conditioning enterprise production scheduling and channel stocking has far exceeded previous years.
Following the high growth in March, domestic air conditioning production continued to grow at a high rate in April. According to AVC data, in April, the total production of air conditioners in China was 17.41 million units, with domestic sales of 10.03 million units, a year-on-year increase of 34.3%, and export production of 7.38 million units, a year-on-year increase of 6.8%. What is the driving force behind the sustained high growth of domestic sales and production of air conditioners, and how long will it last?
Under multiple favorable factors, companies have high market expectations for 2023
This year, whether it is the improvement of real estate, the return of consumer order, or domestic consumption stimulus policies such as exchanging old for new, all have released positive signals for the home appliance market, including air conditioning. The uniqueness of air conditioning products lies in: firstly, the installation properties of air conditioning determine its closer relationship with real estate. Secondly, in terms of demand, the demand for multiple air conditioners per household is more common, and the level of popularization in the rural market is relatively low. According to AVC monitoring data, the retail sales of air conditioners on the Pinduoduo platform were 2.58 million units in 2022, a year-on-year increase of 73%. Based on Pinduoduo's user base and sales characteristics, this group of household appliance users are more distributed in the lower tier market, which means that there is still significant penetration space for air conditioning in the sinking and rural markets. Thirdly, based on the seasonal operation attributes of air conditioning, users have a deeper sense of energy conservation. For example, refrigerators are products that operate continuously for a long time, and customers have unclear feelings about changes in power consumption or electricity bills. In hot weather, with air conditioning running almost all day, electricity bills skyrocket. Therefore, under the stimulation of policies such as exchanging old for new and green energy-saving subsidies, the air conditioning market has greater flexibility. With the support of these factors, the market confidence of enterprises has become more abundant this year.
Under low inventory levels, the inventory levels of manufacturers and channels are rebuilding
In 2022, under the dual pressure of cost and demand, there is a lack of willingness to hoard goods through channels, coupled with the concentrated release of demand caused by the mid year high temperature. The industry's inventory level has entered a historical low, and safety inventory needs to be established as soon as possible. At the same time, many places this year have experienced significantly higher temperatures since March, and combined with various meteorological research information, it is expected that there is a high probability of temperature rising this summer.
Some air conditioning channel manufacturers missed out on market opportunities due to low inventory last year. Under the expectation of a positive market this year, both manufacturers and channel providers tend to increase their stock appropriately before the peak season to meet the demand for concentrated outbreaks of high temperatures.
Under cost fluctuations, enterprises seize market resources by preparing production in advance
With good market expectations and increased investment from various enterprises, it is crucial to control costs and grasp core resources. Since March, due to factors such as the liquidity crisis of overseas banks, the upward trend of copper prices has been temporarily postponed and is in a stable and volatile stage. As an important raw material for air conditioning, refrigerants have shown a significant upward trend in recent prices. Perhaps out of a judgment on the future trend of rising costs, various home appliance manufacturers "frantically seized" upstream core resources in March. According to Ovi's understanding, upstream manufacturers, including compressor factories, have orders full and inventory has long been sold out. This is also the reason for the high output in the short term.
The trend of terminal demand is still unclear, and companies still need to be cautious in stocking up
No matter how good the expectations of manufacturers or channel providers are, and how actively production and stocking are, market performance still depends on the demand of end consumers. 1. According to data from February, air conditioning retail achieved good growth both online and offline. However, after entering March, the growth momentum sharply declined: according to monitoring data from Ovi Cloud Network (AVC), 23W10-13 (2.27-3.26) had negative growth on the air conditioning line for four consecutive weeks.
The positive effect of real estate still needs time to pass, and whether the expected high temperature will arrive still needs to be verified. In the face of significant uncertainty in the market, high inventory is both a weapon and a burden. Enterprises also need to prepare goods reasonably based on their own business situation and strategies, and must not blindly follow the trend.