core sector communique

Despite difficult climate, MDA market records growth in volume sales worldwide

GfK findings for the first half of 2012 at the IFA trade fair

Nuremberg, 29 August 2012 – In Europe, the Central and Eastern European markets are recording an improvement in volume sales, with only a few exceptions, while the Southern and North European markets are under pressure. Demand in the Middle East and Africa developed in a pleasing way overall. Growth in the Asian markets is slowing as a result of the negative developments in China and India. North America shows more stable development, while the situation in South America is positive once again. These are findings from GfK (NPD for North America) on the market for major domestic appliances compiled for the IFA 2012 in Berlin, Germany.

The good development continues to be primarily attributable to growth in emerging countries. The trend towards high value, energy-efficient products is further boosting the market. In addition to the introduction of the new energy label in Europe and the rising interest in energy-efficient products worldwide, demand for larger capacities and comfort is also positively affecting the markets. For 2012 as a whole, a decline of 1.5 percent (basis: US$) is forecast for the global major domestic appliance market. However, in unit sales, this equates to a rise of 1.5 percent. For 2013, a more positive development in unit and value sales is expected.

Varied picture in Europe

While the pleasing development continued in Eastern European countries, with the exception of the Balkans, Hungary and the Ukraine, Southern and North European markets registered declines. However, Austria, Belgium, France and especially Germany all achieved single-digit growth and therefore successfully avoided negative sales figures.

As expected, the market has been boosted by the introduction of a new European energy label, which allows consumers to spot the most efficient appliances at a glance. From January to June 2012, 1,706 different highly efficient models (A+++ or higher) were sold on the European market. This is particularly evident in Austria and Germany, where energy efficiency is a very important factor in the purchasing decision.

The main considerations when buying major domestic appliances are efficiency, size and user friendliness. For refrigerators and freezers, the share of no-frost appliances with high energy efficiency is rising. In the washing segment, high-load machines and heat pump tumble dryers are the most popular. For keen chefs, induction hobs and pyrolytic ovens are becoming more prevalent.

Appliances are increasingly being purchased over the internet. In the UK and the Czech Republic, over a quarter of all sales are already attributable to this channel.

Middle East/Africa positive overall

With just a few exceptions, countries in the Middle East and Africa registered strong sales increases in the first half of 2012.

Growth in major domestic appliances in the Middle East persisted, with demand registering a double-digit increase compared with the first half of 2011. As one of the largest countries in the region, Saudi Arabia is still the principal driver for demand. This progress can be expected to continue in light of the ongoing demand for property along with a younger population. Aside from the United Arab Emirates, smaller markets in the Middle East also registered growth. The United Arab Emirates recovered over the last few months in particular, which gives rise to hope for a more positive development during the fasting period of Ramadan.

While the North African countries of Morocco and Tunisia are still suffering from single-digit negative rates, the larger countries of Egypt and Algeria are back to double-digit increases. Alongside South Africa, West and East Africa are also becoming ever more important, with growth here also in the double-digit range.

Growth in Asia slowing down

Growth in the Asiatic region was above all held back by negative developments in China and India. The fall in demand in China can be attributed to the general economic situation, the end of the government subsidy system for rural regions and the intensification of government controls in relation to land ownership in cities. The recently introduced subsidy for energy-appliances is expected to have a positive influence in the second half of the year.

In India, the economic climate is also having a detrimental effect on the market for domestic appliances. Low growth for the gross national product, a weak rupee, higher excise taxes, high rates of inflation and rising interest rates are all affecting purchasing behavior and causing demand to fall. In the second half of 2012, economic conditions are expected to improve again. The festival of Diwali should also have a positive impact.

The South-East Asian markets continue to record pleasing growth rates and a trend towards higher value products, such as two-door refrigerators and washing machines with larger loading volumes as well as greater interest in energy efficiency.

Latin America on the growth path

In North America the market for major home appliances has stabilized. A slightly more positive development is expected by the end of 2012.

Latin American markets are continuing their pleasing development. Since December 2011, the reduced IPI tax (VAT for industrial goods) has been helping the sector in Brazil achieve positive growth figures. The government extended this measure until August 2012. The resultant lower average prices are a purchasing incentive for consumers. With penetration of less than 50 percent of all households in Brazil, potential is high in the washing machine market which has been steadily growing. Areas in which the penetration rate is more than 90 percent, such as refrigeration devices and kitchen appliances, achieved double-digit growth rates. Despite import restrictions, the Argentine market is continuing to grow, so it is evident that a greater number of appliances manufactured locally are being sold. Sales of products with a lower number of features are rising as a result. In Chile and Peru, economic advancement, lower rates of unemployment and foreign investments are all supporting growth on the market for white goods.

Is global improvement also expected in future?

For 2012, a slightly positive development of the global market for major domestic appliances is expected. Higher value products are becoming ever more popular in the emerging countries too and the issue of energy efficiency is becoming increasingly important outside Europe. At the same time, the volume of purchases that are made online is constantly rising.

The method

Through its retail panel, GfK regularly gathers data on washing machines, tumble dryers, dishwashers, refrigerators, freezers, cookers and ovens, hobs, extractor hoods and microwaves in more than 90 countries around the world. The current analysis is based on data for the first half of 2012. The information for the North American market comes from the market research organization NPD Group.

About GfK

GfK is one of the world’s largest research companies, with more than 11,500 experts working to discover new insights into the way people live, think and shop, in over 100 markets, every day. GfK is constantly innovating and using the latest technologies and the smartest methodologies to give its clients the clearest understanding of the most important people in the world: their customers. In 2011, GfK’s sales amounted to €1.37 billion.