Global Air Conditioning market study 2015

This article was originally written for RAC Magazine by Saziye Dickson, BSRIA Worldwide Market Intelligence in June 2015.

1 Introduction
2 Product Trends
3 Related articles on Designing Buildings Wiki

[edit] Introduction

According to the 2015 BSRIA World Air Conditioning study, the world air conditioning market continued to surge upwards in 2014 reaching an estimated US$97.7billion in value, up by 7% over 2013. Much of the increase is attributed to the Asian Pacific region in particular China. The Middle East, India and Africa (MEIA) region showed bigger growth albeit from a smaller base than Asian Pacific region in 2014, growing by 9% in value terms.

As a result Asia Pacific is still the largest world region in terms of air conditioning sales with US$56.5 billion, or 58% (up from 56% in 2013) of the world market in 2014. Within the region, China and Japan represented 83% of the market by value. The growth of splits system in China in 2014 was mainly driven by the popularity of VRF and ducted splits. However traditional air conditioners, including single wall-mount type and small floor standing did not witness the same fast growth.

In the Asia Pacific region the stars of 2014, in order of growth rate, were; Myanmar, Vietnam, China, Hong Kong and Malaysia which all showed double digit growth rates. On the other hand, Australia, Thailand and Indonesia declined slightly in 2014 in value terms.

The growth was echoed in the Americas region in 2014 for air conditioning products with a growth of 7%. The biggest contributors to this growth were the US market by 6% followed by Brazil with 28%. The US packed market grew in 2014 as a result of a number of factors:

The general health of the economy and the increased consumer spending;
The good pace of growth of the construction industry;
The effects of the introduction of regional efficiency standards for ducted splits;
The good health of the ductless market.

In Brazil, the main reason behind the growth was the El Nino weather phenomena which brought one of the warmest summers for years. Third biggest single split (ductless) market in the world grew by 29% by value.

Other significant countries like Argentina, Canada and Mexico all contracted in 2014. Years of government spending in Mexico came to an end resulting in the total AC market dipping by 9% in 2014. The country entered a technical default on its foreign debt in late 2014.

In Canada, the residential market was badly affected by the relatively cool summer however; the commercial sales continued to benefit mildly from the good economics and from the continued, sustained growth in new construction.

In Mexico the drop was mainly in the commercial sector due to the low construction activity experienced along 2013 and early 2014. The residential sector failed to record a growth but the drop was marginal.

The European region declined in value in 2014 to an estimated US$11.2billion a drop by 5% over 2013. Improvements in the UK and Germany were offset by declines in Russia, Turkey, Italy and Spain.

The biggest growth was seen in the UK market, reaching US$1.0 billion, a rise of 22% over 2013. The UK air conditioning market is strongly linked to commercial construction trends and much of the AC market has been driven by trends in the London area, especially for central plant products and the VRF market.

The overall German AC market reached US$1.2 billion showing 2% growth. Europe’s biggest AC market Italy declined by 14%, followed by the second biggest market Russia which declined by 22%. The absence of large-scale projects in Italy with the exception of the Expo in Milan and the mild temperatures in 2014 have affected the chiller and DX markets negatively. Economic sanctions, weakening of Russian Rubble against US$ and the return of Crimea were some of the important factors that had impacted the Russian AC market in 2014.

The MEIA region showed respectable growth in 2014 increasing from US$8.5 billion to US$9.2 billion. The biggest AC market in the region India was the major contributor to this growth in 2014. The market reached US$2.2 billion from US$1.8 billion. There were several contributing factors such as rising business and consumer confidence after the new government was formed in May 2014, rising income levels and increasing real estate sector.

Amongst the other significant growing countries were Nigeria, Qatar, South Africa, UAE and Iran, in order of growth rate by value. Egypt and Saudi Arabia were the only two important countries where the growth was not seen.

[edit] Product Trends

[edit] Moveables

Total sales of moveables for 2014 are estimated at 1.8 million units representing drop of 3% compared to 2013 and valued at US$526.5 million. The biggest moveables market, the United States declined by 6% in 2014 and reached 870,000 units. The biggest surprise came from the Chinese market which has increased over 200% compared to 2013 and has reached 100,000 units. The dramatic growth was mainly driven by the popularity of online shopping. Many people and companies purchased moveables online as a temporary solution.

The other significant markets were Brazil, China, Russia, Canada and Germany.

[edit] Windows/Through the wall

In 2014, the windows/ through the wall market continued to lose its share with sales of just below 11.7 million with a corresponding value of US$2.5 billion. This represents a decrease in volume of 9%. The United States continued to be biggest market in the world comprising 39% of the total market by volume and 54% by value (windows and through the wall units combined).

[edit] Splits

Total sales of all splits showed a second consecutive year of growth in value reaching US$74.5 billion in 2014. The biggest contributors to this growth were China, Japan, the United States, Brazil and India and these countries accounted for 70% of the world splits market by value.

The growth was seen in all types of products in 2014, the growth ranged from 5% to 18% in volume terms. Single ductless splits account for 88% of the total splits market followed by single splits un-ducted 9% and VRF and Multi splits. However, the biggest growth was seen in the VRF market by 18% albeit from a small base.

The five biggest growing countries in terms of compound annual growth rate are expected to be Myanmar, Brazil, Nigeria, India and Colombia between the period of 2013 and 2018.

Small splits are increasingly a commodity product; stricter legislation of course specifically in Europe is putting increasing pressure on energy efficiency standards and a potential switch to new refrigerants such as R32 has put a lot of pressure on companies in the market place and will continue to do so. Products are being developed to respond to the changes, most splits in European countries apart from Russia now are inverters.

[edit] VRF

The VRF market continued with its unbroken growth in 2014 and reached 1.3 million units with a corresponding value of US$9.7 billion. The top ten markets were in order of importance; China, Japan, South Korea, United States, UK, France, Brazil, Turkey, India and Germany by value.

This market is expected to continue to grow due to its attractive features of ease of installation, compact size and one-stop-shop approach. In 2014, in many market VRFs continued to gain market share from the small to medium size chillers.

BSRIA expects this market to grow at around 11% CAGR between 2013-2018, in value terms. Albeit may be from a small base, the biggest growth is expected to be seen in Nigeria, UAE, Hong Kong, Cambodia, Egypt, Brazil and Saudi Arabia.

[edit] Indoor Packaged

Indoor packaged are normally defined as self-contained units for light commercial applications, which have indoor installation to respond to space constraints. Therefore, this is a relatively niche market. The world market was just under 100,000 units in 2014 which fell from 108,000 units in 2013 with a corresponding value of US$535 million. Japan was by far the biggest market for this product accounting around 53% of the total market by value followed by China, Taiwan, Spain and Brazil.

In the long term BSRIA expects this market to decline by around 5% per annum in value terms between the period of 2013 and 2018. This product is declining in popularity in many countries, due to a preference for splits, chillers and VRF.

[edit] PTAC (packaged terminal air conditioner)

This a region-specific product that’s mostly used in North America. Outside of this region this market remains negliable. The market was 506, 000 units in 2014 with a corresponding value of US$278 million. The Unites States accounts over 85% of this market by volume. The PTAC market was particularly dynamic in 2014, as both new construction and refurbishment accelerated in hospitality applications. The market grew from 423,259 units in 2013 to 442,128 in 2014.