Shops offer discount on unsold air conditioners

Fearing losses following the implementation of new specifications on minimum energy consumption, shops selling air conditioners in the Kingdom have launched promotional campaigns offering as much as 50 percent discounts on air conditioners they had stockpiled and which don’t meet the new specifications.
According to estimates, there are almost 1 million air conditioning units stocked in Saudi warehouses which don’t meet the new specifications. And the traders are desperate to dispose them off before 2014 when the new regulation will take effect. Saudi Customs stopped issuing certificates of conformity for air conditioning units that don’t meet the new specifications since Sept. 7, at the end of a two-month grace period announced in a communiqué in mid-May.
Come 2014, and the Ministry of Trade and Industry will start its inspection campaign in markets to ensure that such units are not put up for sale.
Sa’ad Al-Suwailem, deputy chairman of the National Commercial Committee in Saudi Chambers, said merchants were facing difficulty in disposing of huge numbers of air conditioners, which they had stockpiled following speculation that there would be an increase in the sales volume of air conditioning units this year. On the contrary, sales dropped almost 20 percent.
“Some stores have announced a 50 percent discount on air conditioning units to get rid of huge stocks before the end of the specified period,” Al-Suwailem said.
He said merchants’ inability to dispose of units that don’t meet the new regulations, imported or locally assembled, will result in huge losses in the absence of demand for these units and despite the ongoing promotions. The Saudi market hasn’t had air conditioning units that are made in the USA or Europe for the past 10 years, and most units in stock are made in South East Asian factories, or locally made. These units enjoy a five year warranty in most cases, he added.
A member of the National Commercial Committee said the Saudi Standards, Metrology and Quality Organization for air conditioning units are not applicable, because it demands high quality that are way beyond the consumers’ pocket. Consumers usually look for lower prices and not an extended period of warranty, he said.
He said the air conditioning market is divided into three segments — high quality with maintenance and warranty that could reach 20 years, medium quality air conditioning units with 10 years warranty, and low quality units with a five year warranty. The air conditioners in the last segment are in high demand because they are the cheapest.
Even though new units consume less electricity, and can reduce monthly electrical bill by SR15, their prices are expected to be 20 percent more than those that exist in the market. Profit margins in air conditioning sales don’t exceed 10 percent, he said.