Hitachi has suffered heavy losses in India and has fallen out of the top three air conditioner (AC) brands in the country, a position it held before the Covid-19 pandemic, The Economic Times (ET) reported on Tuesday. Executives said the firm may require a radical shift in strategy to take back its position.
Quoting figures from researcher GfK, industry executives said from more than nine per cent in the pre-pandemic 2019-20, Hitachi’s market share of the number of ACs halved in April. From 2020-21, Johnson Controls-Hitachi Air Conditioning India has seen its profits shrink year-on-year and the firm went into losses in 2022-23. Hitachi was among the top three AC brands in India in 2019-20 but in 2022-23, the firm ended at the seventh spot. Lloyd and Daikin entered the top four bracket and second spots. The Indian air conditioner market, which is worth Rs 28,000 crore and sells more than 8 million units annually, is highly competitive with over 30 brands vying for market share.
Hitachi has a great recall value in the urban parts of India and to garner back its retail position, all that the firm needs is some hero models, retail push, and marketing, the head of a major retail chain said. Breaking the pre-Covid levels of 2019-20 for the first time, Hitachi Air Conditioning India in 2022-23 registered a 10 per cent year-on-year rise in sales to Rs 2,384 crore. But it also recorded a net loss of Rs 82 crore when compared to a net profit of Rs 16 crore in 2021-22, and Rs 33 crore in 2020-21. Rs 83 crore in 2019-20 and Rs 86 crore in 2018-19.
In contrast to Hitachi, other listed air conditioner manufacturers have seen their profits improve compared to the pre-pandemic period. For example, Voltas' net profit increased to Rs 1,405 crore in 2022-23, up from Rs 464 crore in 2018-19. Blue Star’s net profit rose to Rs 366 crore in 2022-23 from Rs 121 crore in 2018-19. Johnson Controls-Hitachi Air Conditioning India has been undertaking cost cuts since last year, the chief of a leading electronics retail chain told ET. The firm merged a few service centres and closed a few of its branches and offices.
An executive said that the company needs to decide whether to position itself as a value brand or a premium brand. He also said that the company needs to relaunch some products with India-oriented innovation to win back market share. He noted that the company used to be a premium brand, but its pricing actions were more in line with a mass brand.
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When Hitachi’s peers were increasing prices due to gross margin pressure and higher input costs, Hitachi cut prices last year, another executive said. Due to this, they lost margins, retention, and their premium factor, he added.