This research report on the global air conditioner market offers analysis on market sizing & forecast, share, industry trends, growth drivers, and vendor analysis. The study includes insights on segmentation by types (RAC (single split, window, and multi-split ACs) and CAC (PAC and VRF)), application (residential sector and commercial sector (office space, airports and public utilities, hospitality, hospitals and industrial and others)), and geography (Europe, APAC, North America, Latin America, and MEA).
At the global level, China leads the VRF segment, with more than 55% share in sales, followed by Japan, Europe, and South Korea.
The global air conditioner market is expected to be driven by three major countries – China, the US, and Japan during the forecast period. These countries account for more than 70% of the value and over 60% of the volume of air conditioner equipment. The market growth is expected to be steady, with supply-side parameters not affecting the air conditioner (AC) industry cost structure on a wider scale. Market challenges are majorly from the demand side with a varying degree of fluctuation across the regions. On the demand side, the volumes are growing, while the prices have not been allowed to fluctuate drastically due to high competition. Geographically, APAC is the leader in the demand for AC. The consumer acceptance of new and efficient products is low in APAC while the same is high in North America and Western Europe.
The increased construction output in APAC is boosting the market significantly. The APAC region is the major end-user market and also a major manufacturing hub. China, India, and Thailand are the leading manufacturing hub in the APAC region. At the global level, China leads the variable refrigerant flow (VRF) segment, with more than 55% share in sales, followed by Japan, Europe, and South Korea. The demand for multi-split models is growing rapidly across APAC, driven by steady economic progress and commercial office construction growth. The sale of VRFs is growing across commercial categories in APAC. In APAC, China leads in the manufacturing of multi-split models. The investment in the real estate market of China is a major driving factor for the commercial segment growth.
Stringent regulatory compliances are expected to increase as the greenhouse gas emission, and electricity consumption is growing at a rapid pace. In many of the regions, 70% of the electricity consumption at residential spaces is on account of using air conditioner devices. More than 40 countries have implemented standards and labeling policies for air conditioner models. Therefore, on-going improvements in technology are mainly driven by regulatory compliance and amenability.
The global air conditioner market by revenue is expected to grow at a CAGR of over 5% during the period 2018−2024.
This market research report includes a detailed segmentation by type, applications, and geography.
Air Conditioner Market: Type
Multi-split models are gaining fast acceptance in China, India, and other developing countries
The demand for single and multi-split models is growing rapidly. The growing electricity consumption has driven the high adoption of grade 1 RAC, with better energy efficiency and low cost. Although window units are inexpensive, the popularity is declined as they restrict the natural flow of air and light and produce a high level of vibration and noise. In terms of demand, the Middle Eastern market has a higher demand for this model. These units account for roughly 50% of the Middle Eastern residential segment.
Single split air conditioner devices are majorly replacing window AC models in the residential sector, as they are highly efficient. The efficiency is estimated to be up to 30% more than the other types of air conditioner devices. Non-inverter types single split devices are majorly in demand in low-income countries as the inverter type has a high installation cost.
Multi-split AC is used to cool multiple rooms. The multi-split segment is one of the fastest-growing as these allow for multiple types of indoor units. The decline in window AC has resulted in the growth of both single and multi-split models. Multi-split devices are mainly used in the commercial sector, especially in small offices. They are widely available in markets such as Japan, Europe, and the US, and are fast gaining acceptance in China, India, and other developing countries.
Commercial air conditioner devices are mainly used to provide air conditioning to a large space making use of highly efficient cooling systems. VRF systems are mainly the HFC-compliant, while packaged models are still dependent on HCFC refrigerant in APAC and the Middle East. Japan, Oceania, and the US to a larger extent have shifted entirely to HFC refrigerants. China and other APAC countries have emerged as major end-users of multi-split devices. VRFs are replacing chillers in many regions and have a higher potential in the future. Packaged air conditioner devices and VRF systems provide significant opportunities for energy savings through reduced greenhouse gas emissions. The usage is high in Europe and North America, growing steadily in other regions. Smaller commercial buildings such as hotels and offices are the major end-users. VRF systems have been gaining wider acceptance in Europe, Japan, and China. The major advantage, which is aiding their growth, is the use of smaller air handlers in the system that can be independently handled and channeled back into the system.
Air Conditioner Market: Application
The US residential sector market has observed the demand for the ducted as well as non-ducted air conditioner devices
As the requirement for air conditioning is growing, the residential sector is exhibiting stronger demand than the commercial sector. The growth in the residential construction market and the replacement market are the major drivers for the demand in the residential sector. Soaring temperatures across regions, due to global warming, have increased the demand even from those regions which were earlier characterized by ideal climatic conditions. Changing climatic conditions, affordability, and lifecycle cost savings play a major role in increasing market demand. The US residential sector market has observed the demand for ducted as well as non-ducted models, while the regions are MEA and APAC prefer more of a non-ducted split type. The demand in the residential sector is higher than the commercial sector mainly on account of new volumes generated across regions and the refurbishing of home or replacement demand.
The demand for air conditioners from the commercial sector is growing significantly. The sector makes use of highly efficient models as they can afford a high initial investment. The advent of flexible/co-working spaces has provided more opportunity for the manufacturers, as they account for up to 6% of the total office space in 20 of the principal global markets (cities of US, Western Europe, Middle East, China, Australia, Japan, South Korea, and India). Furthermore, the growth of low-cost airlines across all regions has not only pushed up the air traffic but also has led to the development of new airports. Most airlines in APAC exhibited double-digit growth. The reason attributed – modernization of airport, the launch of many greenfield airports, an increase in the number of low-cost carriers, and overall regional economic growth. Hence, the growth in commercial spaces and low-cost air travel are expected to influence sales in the commercial sector.
Air Conditioner Market: Geography
The Europe market has been growing steadily with respect to value; however, the volume has been stagnant
The growth in APAC is largely driven by metropolitan and tier 2 cities with high disposable income. China, India, and Southeast Asian countries are some of the regions, which have a high potential for the market. The largely untapped tier 2 and tier 3 cities' growth rate for AC consumption is slow and offsets the rapid growth witnessed in major urban hubs. With respect to demand and production, China dominates the APAC region, as it produces more than 60% of the equipment manufactured globally. The growing population, urbanization, the higher purchasing power are the factors driving the demand for room air conditioner models in China.
The North American market has been boosted by high capital investments and the rise in the consumer income, aided by tax cuts. The trend is positive and bullish in the market. The competition is high and the pricing structure plays an important differentiating factor. The demand is mainly for high-energy efficient devices. Stringent administrative guidelines on reducing the energy consumption will have a major impact on the industry with respect to cost and selling price. The US market is driven by the rise in residential construction and the growing demand for replacements.
The Europe market has been growing steadily with respect to value; however, the volume has been stagnant. The long-term outlook for demand in Europe is moderately positive, while the short-term outlook is very bright. Extended summers and heat waves are increasing the demand in the short term. The region has a significant number of trade agreements that favor trade liberalization and help seamless sourcing, with reduced complexity with respect to duties and taxes on imported products. Hence, the pricing structure is more robust in Europe.
The demand is on the rise in Latin America, as the temperatures soar in summers to very high degrees, and also, the disposable income of the population has grown significantly. Although the local demand is positive, it could be impacted by external factors such as increasing interest rates in the US, trade issues between China and the US, and the slowdown in some developed markets.
Key Vendor Analysis
The global air conditioner market is highly competitive with a high influx of global, regional, and local players. The majority share of the market is captured by global companies such as Daikin, Voltas, LG, Carrier, and Midea. To maintain a competitive edge with other players in the market, global players are focusing on developing innovative products and increasing their product portfolio by making considerable investments in R&D. Global companies have come up with new strategies such as the introduction of new products, marketing, and promotional activities, investing in joint ventures, and following dual-brand strategies in some regions to capture the market. Although established players dominate the market, growth opportunities for regional and local players also exist as they target lower or Tier-II markets or cities. The competitive intensity for the air conditioner market is higher in APAC currently on account of a large untapped market.
Global vendors are focusing on expanding their footprint in developing markets to cater to the growing customer base and expand their product portfolios. The market competition is expected to intensify further with an increase in service extensions and technological innovations. Vendors compete on various factors such as brand, geographical presence, product portfolio, features of the products, refrigerants used, power consumption, and efficiency of the products developed.
Other prominent vendors – Bosch, Chigo, Cruise, Dunhambush, Fedders, Fujitsu, Galanz, Godrej, Gree, Haier, Hitachi, IFB, Lloyd Electric, Micromax, Onida, Sanyo, TCL, Toshiba, Trane, and Whirlpool
Key Market Insights
The report provides the following insights into the air conditioner market for the forecast period 2019–2024.
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