Turmoil on the weather and political front coupled with negative consumer sentiments has slowed down growth for consumer durable companies. The durables industry, which witnessed growth rates of 12-15% in April last year, saw business degrow to less than half i.e. 5-7% in the same period this year.
Eric Braganza, president of Haier Appliances (India) and honorary secretary of Consumer Electronics and Appliances Manufacturers Association (CEAMA), said, "The market has not been very buoyant as such for various reasons. Besides, the industry has witnessed only marginal growth this time around."
While disruptive weather and unstable political scenario are key reasons, industry players feel economic uncertainty is impacting the end-user to go out and make that purchase.
Confirming the slowdown in the overall durables industry, Kanwal Jeet Jawa, managing director, Daikin India, said that April was a difficult month and that they were slightly short of sales targets for the month.
"At present, Indian economy is not in the best of the situation and in the short-term things are a bit uncertain," said Jawa, adding that industry growth came down to 5-7% as against to 10-15% last year.
The consumer durables industry has been stagnant for some time now and industry players see this scenario continue until something changes the market dynamics very drastically.
Ranjith Nair, head of business development, Siemens Home Appliances India, said, "Consumer across the country are not willing to shell out the kind of money and are waiting for the outcome of the political scenario and economic stability. Hopefully things could change, if the new government at the centre comes out with attractive policy initiatives for the consumers in the ensuing budget."
Tracking the consumer spending sentiment, a recent report by Mumbai-based constultant and research firm ZyFin Research said that spending on big-ticket items such as durables and vehicles is expected to further decline in the coming months. citing its Consumer Outlook Index (COI) report for April 2014, the financial research and analytics company said that consumer spending declined for the fourth consecutive month to its lowest-ever level despite sluggish improvements in employment and inflation.
"Consumers spending is expected to hit a new low. Contributing sectors such as consumer durables and auto will remain weak," said Debopam Chaudhuri, chief economist, ZyFin Research.
Based on a monthly survey of 4,000 consumers across 18 cities (metros, Tier I and Tier II) the ZyFin COI registered a score of 40.6 in April 2014 as compared to 42.2 in the previous month, the spending sentiment index declined to 25.9 from 29 in March 2014. A score above 50 reflects optimism while below 50 is an indication of pessimism.
Citing reasons behind the weakness in Indian consumers' willingness to spend over the past four months, the report said that consumers were unsatisfied with the slow improvements in fundamentals. "They have decided to postpone their spending plans altogether. And in the absence of organic growth, a demand push is of utmost necessity, warranting urgent policy intervention," the research firm said in the report.