Impact of the global crisis on the consumer durables sector
The worldwide household appliances market, with a size of $138 billion, was among those most strongly affected by the global economic slowdown. In 2008, consumer demand in North America and Western Europe, which makes up around almost half of the global household appliances market, declined sharply - dropping by more than10% in North America and by 3-5% in Western Europe. Despite growth rates ranging from 2-8% in Eastern European, Middle Eastern and African markets, a sudden decline was experienced in demand towards the end of the year especially in Eastern Europe.
The global crisis had an adverse effect on retailing companies. Decreasing demand caused leading retailers to accelerate their restructuring programs and take precautionary measures, mainly in the form of layoffs.
The significant slowdown in construction and housing in Turkey in 2008 led to a 2% drop in production of the four main household appliances while domestic sales dropped by 3.5%. On a product basis, refrigerator production slid by 13% and sales decreased by 2%; washing machine production and sales shrank by 8%; oven production increased by 29% although sales dipped by 11%; dishwashers turned in the best performance of the four main product categories as production increased by 16% and sales improved by 5%.
The recession in Europe, one of Turkey's most important export markets, had a detrimental effect on the household appliances exports. However, despite this contraction, exports grew by 1% due largely to the strong performance of dishwashers and ovens. Household appliances exports showed some positive signs, particularly in October and November, with above average demand for Turkish products in the European market. Economic concerns have increased price sensitivity, decreased the quantities ordered and increased the demand for faster procurement. This has eroded China's competitive advantage and redirected some demand towards Turkey.
On a product category basis, exports of refrigerators declined by 14% and washing machines exports decreased by 3%.
In contrast, exports of dishwashers were up by 19% and ovens, the best performing category among the four,
increased by 41%.
In terms of the breakdown of exports from the sector, the lion's share of household appliances exports went to the refrigerator category (38%), followed by washing machines (31%), ovens (22%) and dishwashers (10%).
Growth in consumer electronics continued despite the crisis
Despite the crisis, the global consumer electronics market maintained growth with revenues rising by 9.4% to reach $678 billion. The transition from analog technology (CRT televisions) to digital technology (LCD televisions) continued and the unit share of CRT televisions dropped to 8% of the total TV market. In Western Europe, LCD television unit sales increased by 32% and revenues rose by 15%, making it the only consumer electronics category to grow in both unit sales and revenues. The global economic crisis depressed demand in the second half of 2008, putting pressure on consumer electronics prices that resulted in cuts of up to 50% in LCD panel prices.
In 2008, the domestic market for televisions shrank by 17% to 1.85 million units. The transition from CRT to LCD televisions continued as the CRT television market shrank by 30% and that of LCD television market grew by 47%. At the end of 2008, production of LCD televisions made up 60% of total TV production in Turkey.
Koç Group Consumer Durables Segment
Koç Group Consumer Durables companies maintained their leadership positions in the sector in 2008. With the largest sales and after-sales network in Turkey, Koç Group companies continued to dominate the sector with 54% of the household appliances market and 45% of the television market. As the transition from analog technology to digital technology in televisions continued, domestic sales of Grundig Elektronik LCD televisions increased by 132%. With production facilities in Turkey, Russia, Romania, and China, Koç Group companies rank as the 3rd largest manufacturer of household appliances in Europe and the 6th largest in the world.
Koç Group companies accounted for 46% of all household appliances exports and 23% of television exports from Turkey.
In 2009, Arçelik decided to merge with Grundig Elektronik, a subsidiary in which the Company holds the majority of shares. The acquisition of Grundig Elektronik A.Ş. has been decided in the Extraordinary General Meeting of Shareholders of Arçelik Anonim Şirketi held on June 29, 2009.