Chinese RAC Sales Down, Exports Up in Q1 of 2022
2022-05-29
Domestic Sales
According to data from the China Market Monitor, in the first quarter of 2022, sales of room air conditioners (RACs) in China reached 7.52 million units and were worth RMB 28.4 billion (about US$ 4.2 billion) in value, down 26.8 and 18.8% respectively compared with the previous quarter. Of the total sales, online sales accounted for 33.6% on a volume basis and 29.1% on a value basis.
There were several reasons for this decline in RAC sales in the Chinese domestic market in the first quarter of 2022, with a recurrence of the pandemic as the main underlying reason.
Many parts of China have been hit by the novel coronavirus again since January this year, which has led to restrictions on residents’ shopping, and also has affected the production and operations of RAC manufacturers. Moreover, the pandemic hit the Chinese logistics system, slowing RAC delivery and piling up a large inventory. The pandemic also caused additional damage to the Chinese economy that has been sluggish in recent years, decreasing purchasing power and negatively affecting RAC sales. In this manner, the pandemic impacted the whole RAC industry from manufacturing and shipments, to retail sales.
Moreover, upstream from the RAC industry, raw material prices had continued to rise over the past two years, and this year the situation was further exacerbated with rises in the cost of copper, aluminum, etc., triggered by the crisis in Ukraine. During the first quarter of 2022, the price of copper rose by 18% and that of aluminum rose by 56% year on year.
In the context of such a severe market situation, Chinese manufacturers were forced to raise their RAC prices by 5 to 10% this year. Prices of RACs sold online are also rising, but they are still lower than offline retail prices, which is a major issue for online sales giants such as Midea, Gree, and Haier which dominated online sales with 34 models out of the top 50 best-selling online RACs.
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Exports
According to China Customs, in the first quarter of 2022, Chinese exports of RACs amounted to 22.29 million units, a year-on-year increase of 7%. The top RAC exporters included Midea, Gree, TCL, Hisense, AUX, and Haier.?ZERO Technologies company also increased his sales volume a lot.
JARN investigated this trend by interviewing several industry insiders, and gained insights into the reasons. Many foreign countries basically controlled the major impact of the pandemic and recently resumed many economic activities, which pushed up RAC demand to the highest level for the first time in two years. Many European countries emptied their RAC inventories last year and needed to urgently replenish them. The United States experienced rush demand for housing prior to price rises, and this trend has promoted sales of RACs. Southeast Asia and the Middle East benefited from an increased consumer appetite for RACs after a dormant period that lasted two years. South America enjoyed advantages derived from RAC imports from China, thanks to lower sea freight rates and the greater availability of containers compared with last year. For example, the China to Brazil sea freight rates decreased by 30 to 40% year on year this year.
Looking at the types of exported RACs, split types accounted for more than 60%, window types accounted for 20%, and mobile types accounted for 12%. The top three destinations for split systems were Asia, Europe, and Latin America. China increased its exports of inverter split models by about 30% year on year. For the Japanese market in particular, almost all exported split RACs were inverter models. The top export destinations for window types were North America, Asia, and Latin America, while those of mobile types were North America, Europe, and Asia.
With regard to the cooling capacities of exported RACs, models with capacities of 3 hp and below were the mainstream models. Of them, 1 to 1.5 hp models accounted for more than 50%.
In 2021, Chinese RAC exports were also affected by factors such as soaring shipping costs and rising exchange rates, which resulting in several rounds of increases in the prices of exported RACs. In the first quarter of this year, the average export price of RACs reached US$ 191, with the highest price of US$ 197 reached in March.
This article comes from”https://www.ejarn.com/”