Survey Shows Inventory Influx
The new survey asked HVAC contractors and distributors across the industry specific questions regarding inventory leading up to the January 2006 transition. The questions were designed to provide insight into the factors that drove the phenomenal growth in production and sales of air conditioning systems last fall; system inventory position and location in the channel; and helping to better determine a reasonable forecast for the rest of the year.
The survey showed that along with building increased inventory, 42 percent of contractors and 54 percent of wholesalers also pulled forward system sales into the fall of 2005 by offering home-owners and builders 10 and 12 SEER to avoid higher 13 SEER prices in 2006.
Surprisingly, 80 percent of the contractors and wholesalers surveyed did not expect to lose sales in 2006 as a result of the pull-forward in 2005. In fact, while more than 80 percent of wholesalers and 54 percent of contractors report that they are carrying more inventory than at this time last year, 55 percent of contractors and 67 percent of wholesalers only expect their inventory of 10 SEER to last through the end of March 2006.
"As strong as the fall â€˜05 and early January '06 demand was (double the prior year), we were quite surprised that contractors and wholesalers felt the excess 10 SEER system stock would only last through the end of March," said Karl Zellmer, vice president of sales for Copeland Air Conditioning. "Overall, the primary results of the survey reinforce an optimistic outlook for the season."
The survey also asked respondents to cite their top concerns, now that the 13 SEER regulation has gone into effect. Of the respondents to this question, the majority of contractors and wholesalers cited the availability of 13 SEER as their primary concern. Their second concern was the cost of the equipment to customers followed by pricing, mismatched units, and training.
"Most contractors and wholesalers seemed pretty bullish on 2006 sales prospects, despite pulling sales ahead into 2005, and higher 13 SEER unit costs," said Zellmer. "This is reflective of expectations of a good economy in 2006, and the perspective that air conditioning is no longer considered a luxury, but is now a necessity."
Publication date: 05/15/2006