Counterpoint Research has revised its initial estimate of its yearly forecast from 181 million to 175–177 million units. IDC India is also thinking about lowering its initial projections for yearly growth of 5%.
New Delhi: High inflation and the rapid increase in the value of the rupee relative to the dollar could reduce demand for smartphones during the holiday season. Market watchers have already reduced their yearly shipment projections for cellphones out of concern for a less successful holiday shopping season, which makes up a third of total sales.Counterpoint Research has revised its initial estimate of its yearly forecast from 181 million to 175–177 million units. IDC India is also thinking about lowering its initial projections for yearly growth of 5%.
“At a time when customers are holding onto their purchases, smartphone manufacturers will need to pass on the extra costs to end users. It makes it more challenging for brands to make sales during the next holiday season “The research director at Counterpoint Research, Tarun Pathak, said.
The gloom is caused by a depreciating rupee versus the dollar, which raises the price of manufacturing smartphones. Despite India having a robust manufacturing base, the majority of the components are purchased from other nations and exchanged in dollars.
Brands may postpone sourcing components as a result, according to Pathak, who also suggested that by mid-August to September, the rupee’s decline may have subsided.
This can potentially result in delayed launches or brands concentrating more on the ‘hero’ launches to ensure sufficient brand memory during the holiday season.
“I won’t have much money left over to spend on other things if my monthly budget for necessities increases. While smartphones are necessary nowadays, upgrades rely on a person’s budget and increased spending capacity “said TechArc co-founder Faisal Kawoosa.
Shipments of smartphones have been falling in India month after month, with inflation mostly hurting demand. As brands struggled to reduce inventories in both the offline and online channels, shipments decreased 9.2 percent month over month in May.
Due to supply chain issues, a 4G chip scarcity, and high shipping expenses, brands have gone up the pricing ladder this year, bringing the average selling price to Rs 16,000.
“Premium and mid-tier brands have the cushion to raise prices in the premium sector to make up for the increased costs. However, they won’t have much room to manoeuvre in the market under 30,000 rupees “said Kawoosa.
According to Abhilash Kumar, a senior analyst at Strategy Analytics, companies might be forced to endure the higher prices for the time being in order to minimise additional effects on demand.
“They might eliminate the current discounts on the gadgets, or even if there is a raise, it will be extremely slight (about 1%),” Kumar added.