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 domotechnica
Feb 18-21, 2008, Cologne, Germany |
Economic report on domotechnica 2008:
Slight growth expected
VAT partly responsible for slowing down growth in 2007
 The international trade fair for household appliances, domotechnica 2008, will take place in Cologne between the 18th and 21st February. Prior to the event, Koelnmesse published an economic report on the household appliance sector.
It is certainly possible to talk of a roller coaster ride in the white goods sector last year. The ZVEI (the German Electrical and Electronic Manufacturers' Association) was still very optimistic around the middle of last year. According to estimations, the VAT increase of January 2007 had not had a lasting negative effect on the demand for washing machines, dishwashers and refrigerators and the manufacturers of large household appliances were satisfied with domestic business during the first half of 2007. In total, the manufacturers sold just as many appliances as during the same period the year before. By the middle of the year it had been possible to compensate for the noticeable loss of turnover in the fitted appliance sector at the beginning of the year. This positive trend could not, however, be maintained, and the association announced a 2.5 percent decrease in sales at the end of the year, compared with 2006. Thus, the domestic household appliance industry reckons on a turnover of 6.6 billion Euros for 2007, based on manufacturer prices. This corresponds to a turnover of approximately 10.5 billion Euros based on end user prices.
This is in line with the estimation of the GfK Group (a market research organisation). It is true that the consumer climate became more stable at the end of 2007 due to the marked increase in consumers' propensity to buy during the Christmas period. There was however a slight drop in economic activity and salary expectations. Reasons for this were the effects of the strong Euro on German exports as well as the turbulence in the international finance markets.
Inconsistent Development
The development needs looking at from different perspectives as different parts of the market developed differently. For instance, the large appliance sector posted a 4.5% drop in turnover in domestic business to 4.4 million Euros. On the other hand, the small appliance sector increased by five percent to 1.9 billion euros. The reason for the drop in the large appliance sector: Many more consumers than expected made their purchases in 2006 because of the impending VAT increase. It is also not surprising that foreign trade, unlike the domestic trend, rose by approximately five percent to 74 billion Euros. The import of household appliances rose by approximately four percent to 5.2 billion Euros. Incidentally: Despite a drop in production in Germany of approximately one percent, a considerable amount of these products are still manufactured in Germany compared to other consumer goods sectors.
Optimism for 2008
Despite the relatively displeasing figures for domestic business, expectations for the sector for 2008 are cautiously optimistic. Provided that the economical and political frameworks remain consistent, a slight increase in turnover for large appliances can be expected. The ZVEI is not expecting the weakness in domestic demand to persist, and is even predicting a turnover increase for white goods of between 3 and 4 percent. An increase in replacement demand and the trend towards high quality brands should stimulate business. However, an increase in prices is also to be expected. The reason: higher production and material costs.
On the product side, numerous trends will help to stimulate the market. One of these is the important trend towards energy efficiency. Water and energy saving large appliances are definitely going to be in higher demand. According to predictions however, large capacity refrigerators with their numerous convenience features, the booming market for induction ovens, steam cookers and high quality designer extractor hoods will also help to stimulate the market in relation to turnover and sales. An unrelenting trend towards high quality products is expected for the small electrical appliance sector. Turnover will probably increase more strongly than the number of items. The sector is after all expecting growth of between one and four percent in 2008.
Heat pumps: growth continuing
Turnover in the heating engineering sector dropped by approximately five percent in 2007. The reason for this was, as mentioned above, the VAT increase and the fact that many purchases were made in 2006 to avoid this. However, certain sectors displayed an enormous increase. Here the trend is also towards convenient, energy saving products. The heat pump sector was therefore able to post a five percent increase despite weak economic activity in the building construction sector. This area is becoming more and more important, not only in the new building sector but also in relation to modernisations. The sector is cautiously optimistic for 2008. The heating engineering sectors are expected to achieve a slight increase in growth of between one and two percent next year.
Sources:
GfK, ZVEI professional associations,
manufacturer information
domotechnica
www.domotechnica.com |
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