Samsung eyes top spot in room air-conditioner segment by 2022

Consumer electronics major Samsung is eyeing the top spot in the room air-conditioner (AC) segment by 2022. In an interaction with Moneycontrol, Rajeev Bhutani, senior vice president, HVAC Division-Consumer Electronics Business, Samsung India said that this will be done by doubling the AC business each year over the next two years.

“We have created a new organisation in August under the company. This is the HVAC (heating, ventilation, air-conditioning) that includes room air-conditioner and system air-conditioner under the consumer electronics umbrella,” Bhutani said.

While he did not share numbers, industry sources said that Samsung holds a 5 percent market share in the room air-conditioner segment. Voltas is the number one player in the segment with a market share of around 24.4 percent.

This means that Samsung will have to double its market share to 10 percent in 2020 and to 20 percent in 2021.

The room AC segment in India generates $2.5 billion in revenue and has been growing at a compounded annual growth rate of 15 percent for the last four to five years.

Bhutani said that they will increase their sales through re-entry into segments as well as through expansion of their distribution channel.

“In order to drive the growth, we wanted to have right addressability. So, we will be improving our product addressability by 100 percent by increasing our inverter portfolio beyond wind-free and premium inverter categories. Further, we will re-enter on-off AC segment and also window AC segment for complete representation in room AC space,” he added.

Citing reasons for re-entry into the window AC space, Bhutani said that this segment still makes up nearly 85 percent of the industry’s total AC business in north and central India.

Samsung is the largest player in segments like television, microwave, said Bhutani, who also added that this year they are leading in the refrigerator business as well.

“We will launch a slew of new products from January onwards (till February end) and the introduction of new ACs will help us in achieving the sales growth,” he added.

Bhutani said that the number of sales outlets will also increase to 14,000 from the existing 9,000 outlets. He said that Tier 1 and 2 regions will drive business for the company which will also open 300 experience stores for HVAC segment. These stores will offer a unified sales and service experience for room and system AC consumers. Further, Samsung will also be hiring additional branded engineers and installers on the field for product maintenance and servicing.

In 2019, the industry will grow by 25 percent according to Bhutani. In 2022, he added that the growth rate could be around 23 percent. Goods and Services Tax (GST) of 28 percent is applicable on ACs since they are considered a luxury product.