Brief summary of 2011 and prospects for 2012

  • In 2011, Russia imported about 4.0 million air conditioners. About 3.2 million of them were sold to installers (companies – installers of equipment), of which 2.9 million units were installed. This brought the Russian market to the 5th position in the world in sales of RAC/PAC, after China, USA, Japan and India.
  • The season 2011 was a very specific one:
    • More than 80% of the installed equipment were installed before June 20.
    • In the first half of 2011 there was a sharp shortage of equipment, in the second half – a very big surplus. Totally by the end of the season there were formed unsold inventories of about 1.3 million air conditioners, of which 0.3 million were sold to installers but not installed.
  • Summer of 2010 was abnormally hot. There was a Hot Wave in the European part of Russia in July and August, the temperature did not fall down below 30 C for 33 consecutive days. In such a situation, the demand for air conditioners was several times higher than the commercially available stocks. There was formed a sharp shortage of equipment, which could not be covered even with the record shipment. Actually, the deficit only fueled demand.
  • By the spring 2011 the demand became a sort of panic. And when by the end of June 2011 the panic settled down, it became clear that the installers collected about 600,000 air-conditioners at the warehouses. As a consequence, between June and July wholesales stalled. In the second half of the year, the installers took only the prepaid equipment, as well as PAC and wall type splits > 5 kW.
  • Record sales and market growth of 2010-2011 had a sound geographical localization. In 2010-2011, sales in Moscow increased by 4.1 times, while in the rest of the country by 2.3 times only. As a result, in 2010-2011, in the Moscow metropolitan area was sold nearly 3 million air-conditioners per 4 million households. The market is largely saturated, and in 2012 it is expected to decrease.
  • Summer 2012 is expected to be cool in the European Russia. The previous two years were hot; three hot years in a row occurred only once in 140 year history of meteorological observations: in 1967-1969. Therefore, it is very likely that the weather in 2012 would not be an ally of the air-conditioner sellers. Any case, the spring 2012 is unusually late. There is about 20 cm of snow in mid-April in Moscow.
  • The prices for air conditioners in 2012 will increase due to a higher rate of yuan to dollar. Many manufacturers raised their prices by 5-10% still at the end of 2011.
  • Given that the real incomes of the population the last 3 years did not have positive dynamics, and the fact that the summer is expected to be cool, it causes a pessimistic mood about the prospects for 2012.
  • By January 1, 2012, importers had in their stocks about 1.3 million air-conditioners (of which about 0.25 million in foreign stocks) with a projected demand of 1.8-1.9 million units. This already led to a sharp reduction in purchases by Russian distributors. Many leading Russian companies have not yet signed contracts for 2012 (usually they do it in November). Totally Russian distributors are expected to purchase of 1.3-1.5 million units in 2012, almost three times less than in 2011.
  • In January and February, 2012, Russia imported about 0.4 million air conditioners, and a substantial part of this amount was “no name” equipment, imported by trading houses and companies that came to the market in the wake of excessive demand. Not having an organized distribution network, in excess of equipment and cold weather they are practically doomed to stay with great leftovers.
  • In 2011, the share (in units) of Japanese brands DROP ped to a record low level of 22%, the share of China and OEM made in China reached 60%. The rest is Korean products. In 2012, the share of Japanese products is expected to increase up to 25-27% with some reduction of Korean share.
  • The share of inverter A/C in 2012 could rise sharply (the sales would remain at about the last year level of 0.4 million units, but due to a general fall in demand the share would increase).
  • VRF market showed the growth of more than 30% for two consecutive years. In 2012 we can expect the growth to continue, but the growth rate would decline slightly.
  • In the VRF market in 2011, the share of non-Japanese brands reached 40% (in units), although three years ago it did not exceed 10%.

In this article were used the materials of APIC and the company LITVINCHUK MARKETING