After air-conditioners, consumer durable companies have decided to up the prices of refrigerators by around five per cent this season owing to the increase in the cost of inputs like steel.
This includes leading manufacturers like Whirlpool, Electrolux-Kelvinator and Godrej, who put together corner nearly 55 per cent of the three million units a year refrigerator market.
"The cost of metals like steel, nickel and copper have gone up. Plastic prices are also at an all time high. So there was no other option but to increase refrigerator prices," said Raj Jain, managing director, Whirlpool of India, which is the largest player with a market share of 23 per cent.
These raw materials together make up 35 per cent of a refrigerator by value.
Electrolux-Kelvinator, which has a 12 per cent market share, is planning to revamp its portfolio and the prices of new models will be 4-5 per cent higher than the old ones with similar capacities.
"But we will be adding new features which should offset the increase in price," said Rajeev Karwal, CEO, Electrolux-Kelvinator.
Samsung, which accounts 10 per cent of the entire market, will retain the price tags on its frost free models, but increase prices of its entry level direct cool models by around Rs 200 per unit.
"We are trying to absorb cost hikes wherever we can by improving efficiencies. Also, the margins on frost models being higher, we can sacrifice some of it," said a company spokesperson.
In 2003, according to ORG-GfK's figures, the volumes in the industry grew by nearly eight per cent whereas value grew by merely 1.5 per cent, resulting in a value erosion of nearly 6.5 per cent.
According to Jain, there was a temptation not to increase prices in a very competitive market. "But there already has been a 15 per cent value erosion in the refrigerator market over the last two years and manufacturers have no more capacity to absorb the escalation of input costs," he said.
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