Phone, appliance plants to go festive a month early

Leading smartphone and consumer electronics companies are advancing festive season production by a month to July. They expect the market will boom during the crucial shopping period, surpassing last year’s record sales, as consumer sentiment improves, buoyed by greater vaccination coverage and no major layoffs or salary cuts this year due to the second Covid wave.

LG, Samsung, Godrej, Haier, Vivo, Realme, Apple, Panasonic and Xiaomi among others are scaling up production to full capacity from next month, especially that of premium products. Demand for these has been strong as the second wave has receded and companies see this trend persisting. Most have placed orders for components to ensure there is no shortage of products like last year.

LG is optimistic about 15-20% growth in festive season business from the year earlier, said Deepak Bansal, vice president, corporate planning, LG India, the country’s largest home appliance maker.

Shortage of phone components
“The production will be in line with sales projections and we will start festive production from next month itself,” he said.

Godrej Appliances business head Kamal Nandi said the industry sees robust demand as people get inoculated and there’s no severe damage to personal finances as happened last year. Godrej will start premium range production in full swing from next month and then entry to mid-segment products.

Smartphone maker Realme is already operating at 100% production capacity to meet demand and will increase capacity by another 50% ahead of the festive season, said Madhav Sheth, CEO for India and European operations. He said the industry is facing a shortage of components but the company will ensure consistent supplies.

“The country is on a path to better health and wellbeing, which will be the most important factor for market recovery,” he said. “We anticipate the festive season to perform well, with improved consumer sentiments and macroeconomic conditions.” The company is targeting handset sales of over 6 million this Diwali.

The festive season begins with Onam in Kerala, which is in August this year, followed by Ganesh Chaturthi, Navratri, Durga Puja and will end with Diwali in November. This peak shopping period accounts for more than 40% of annual sales for consumer electronic and smartphone companies.

If there is no third wave, there will be a demand explosion in the festive quarter, said Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA), the apex mobile phone industry grouping.

“If the vaccination drive is very robust, irrespective of the third wave, the market will do good sales,” said Mohindroo. “The best part is, even during the second wave, most factories continued production at low levels and may have shut down briefly, if at all. Hence, the ramp up in production will be faster.”

ICEA represents companies such as Apple, Foxconn, Oppo, Vivo, Xiaomi and Realme among others.

A Vivo India spokesperson said industrial activities allowed this year during the various state lockdowns helped to build a robust supply chain and sufficient inventory to meet pent-up demand.

Most electronics and smartphone companies had stopped domestic production in May for a few days due to curbs that were almost nationwide but resumed operations in June. Production has been raised to 50-60% of pre-pandemic levels in the past three weeks, which they said is a much faster ramp-up as compared with the aftermath of the first wave as there is no shortage of migrant labour this time.

Companies aim to launch several new models before the festive season. Some product introductions scheduled for the June quarter have now been set to coincide with the period. Panasonic India CEO Manish Sharma said the company is scaling up production of washing machines, refrigerators and televisions with several new models being planned.

Haier India president Eric Braganza said the company is cautiously optimistic about the festive season. “Factory is running at full capacity but too many people are talking about the third wave, which is the only cause of concern,” he said. Gadgetsnow