In an indication that Indian consumers have moved up the value chain, average selling prices across different categories including TVs, cars, smartphones and consumer durables have gone up by 50-80 per cent over the last 3-5 years.
For example, the average selling price of smartphones has gone up from ₹13,000 in 2018 to over ₹21,000 now. Similarly, consumers are now buying larger screen smart TVs at an average price range of ₹20,000-30,000 compared to ₹10,000-15,000 earlier. The auto sector has also seen the average unit price moving from ₹5-10 lakh range to ₹10-15 lakh range with the rising popularity of SUV vehicles.
In the Indian automobile industry, the share of utility vehicles (including Multi-Purpose Vehicles) in the overall ICE passenger vehicles has increased from 34 per cent in FY19 to 55 per cent in FY23 while that of >125cc ICE motorcycles have increased from ~43 per cent in FY19 to more than 48 per cent in FY23 while that of 125cc scooters in overall ICE scooters sale has gone up from 21 per cent in FY19 to 38 per cent in FY23.
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“The average purchases of automobiles across categories (PVs, 2Ws, CVs) have increased because of varied reasons like a premium trend seen in purchases as upper middle class and upper-class recovery has been faster than a lower middle class which largely prefer commuter and entry-level 2ws and PVs as well as an increasing share of alternate powertrains. We are seeing a K-shaped recovery in the economy so the customers whose incomes have not seen a larger impact or have recovered have come back to the buying spree including >150cc two-wheelers as well as CUV/SUV buyers. The commuter and entry-level car segments have still not overcome the loss of income coupled with the inflation effect which is holding them back from participating in the new car market,” said Hemal Thakkar, Director- Consulting of Crisil Market Intelligence and Analytics.
In the smartphone category, the average selling price has reached an all-time high of $265 (about ₹21,500) during the January-March 2023 quarter, and the share of higher-priced smartphones ($600+) increased to 11 per cent from 4 per cent a year ago, according to IDC.
“Low range smartphone market is just not growing, and it doesn’t make sense to smartphone brands as far as the numbers are concerned. These brands are not necessarily concerned about the volumes, they simply want growth, which they can more predictably achieve by increasing the average selling price of a mid-range or high-range unit. Especially as they have found that there are customers who have the propensity to pay at such price ranges,” said Faisal Kawoosa, Founder and Chief Analyst, techARC.
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The consumer durables industry has also witnessed upscaling of products including televisions, air-conditioners and refrigerators. For Instance, the share of large-panel televisions is expected to surpass 50 per cent of overall television demand by fiscal 2027. The share of small-screen televisions was around 40-50 per cent in FY17 which has now dipped below 15 per cent.
“In the last two years, consumers have been opting for cooling products and home appliances with superior health and hygiene features. The traction of products with better features has been higher this summer,” said Pradeep Bakshi, MD& CEO, Voltas Limited.
(With input from Ayushi Kar)