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June Heat Spurs Room Air Sales After Tepid Q1

A pre-summer heat wave that baked much of the country in June helped jump-start the stalled room air conditioner market.

Prior to the June pick-up, dealers and manufacturers were sitting on excess inventory that was carried over from last year’s unseasonably cool summer.

“Dealers were reluctant to buy in the first quarter, and purchases were down year-over-year,” said Kurt Kaufhold, VP and home comfort general manager for Haier America. “There was a lot of carryover from last year. We had the coolest June in 15 years, and the heat didn’t come until late August” — too late to salvage the 2007 season, he said.

Room air is a critical adjunct category for white- as well as brown-goods dealers, who count on the cash flow it generates to ride out the traditionally slower summer months and to help fund inventory for the holiday selling season.

As a result of the overhang, factory shipments of room air conditioners fell nearly 19 percent during the first five months of 2008, according to the Association of Home Appliance Manufacturers (AHAM). Unit shipments were down nearly 22 percent in May alone, to some 1.7 million ACs (see story below).

All that changed in June, when a blanket of heat and humidity hung over the Northeast and Southeast, the industry’s core room air markets. “The heat kicked in and the sell-through took off,” Kaufhold said. “Sales have been great and we’re getting a lot of re-orders now.”

Also aiding Haier was an endorsement in the July issue of Consumer Reports magazine, which ranked the company’s ESAD4066 Paragon room air unit tops within the 5,000 Btu to 6,000 Btu category and labeled its 10,000 Btu ESA3105 a “best buy.”

What’s more, Haier is the most heavily advertised room air brand in dealer print ads, inserts and fliers. According to IFR Group, a Niagra Falls, N.Y.-based market research firm, Haier was featured in 24.4 percent of all AC advertising in May, and 45.2 percent in April, with Frigidaire a distant second (see chart). For the period of May 2007 through May 2008, Haier led the industry with a 17 percent share of print advertising and the most models featured (26).

IFR bases its data on model-level pricing and promotion details captured from 102 newspapers in 85 U.S. markets, representing over 2,200 retailers and 62 percent of the nation’s readership.

While room air pricing has recovered somewhat from prior years, with opening price point 5,000-Btu models returning to $99 levels, significant spikes in the cost of materials, components and shipping could drive double-digit price increases next year, Kaufhold warned.

May Room Air Ad Share