Inflation, interest rates impact home appliances
The production of household appliances faces a deep decline in 2022 due to rising inflation and interest rates. The segment had already been struggling to receive inputs and saw costs soar amid a disrupted production chain and higher commodity prices brought by the pandemic. Now, consumers’ tight budgets - eroded by higher spending on food, electricity and fuel - are taking a toll on manufacturers.The production of appliances plummeted 25.3% year over year, a survey by statistics agency IBGE shows, the third consecutive quarter of decline. A double-digit contraction is also clear in segments like white goods (refrigerator, stove, washing machine), brown goods (TV and stereo) and portable appliances. At the same time, the prices of appliances and equipment rose 7.46% in the same period, up 20.43% in the 12 months through March, according to data from IBGE and the Extended Consumer Price Index (IPCA), reflecting the higher production costs in the industry.The war in Ukraine and the new outbreak of Covid-19 in China further aggravate a situation considered "challenging" by executives, who want to avoid a negative tone. The Asian country is shutting down plants due to lockdowns, especially in Shanghai, which impacts some companies.Some companies are already seeking new suppliers of inputs - dual sourcing has expanded because of problems faced during the pandemic - and also air freight to shorten travel times for some products, while others are adopting a wait-and-see approach. Officially, all companies rule out the possibility of interrupting lines, but part of the market may face this risk."The drop in the first quarter is very much related to the consumer’s cash flow. Inflation has risen sharply and default rates too. The money available among Brazilian consumers for buying home appliances has been used for food, electricity and gasoline," said Sergei Epof, Panasonic’s vice president of appliances in Brasil. His team focuses mainly on the white line, since the company halted the production of the brown line in the country last year, following a global strategy.The Brazilian market is experiencing a combination of weaker demand, more expensive goods - as higher costs are passed on to prices - and more expensive credit, he said. Given the high interest rates, the consumer has been paying more for loans and default rates are on the rise."Demand has fallen and the price of appliances has risen. We had a lot of cost increase, which includes...
Para continuar a ler
PEÇA SUA AVALIAÇÃO