AIR CONDITIONING SYSTEMS MARKET ANALYSIS

Air Conditioning Systems Market Size and Trends

Global air conditioning systems market is estimated to be valued at USD 119.77 Bn in 2024 and is expected to reach USD 202.34 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 7.8% from 2024 to 2031.

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Growing adoption of smart homes integrated with IoT-enabled HVAC systems can drive the market growth. Manufacturers are focusing on developing cost-effective and eco-friendly air conditioning solutions. However, high installation and maintenance cost may limit the large-scale adoption of air conditioning systems in the developing economies.

Rising temperatures and urbanization

With rising global temperatures due to climate change, there has been increase in need for effective air conditioning solutions. Heat waves and warm summers have become more frequent and intense in many parts of the world. Urban dwellers are particularly susceptible to extreme heat due to the heat island effect, which causes cities to experience significantly higher temperatures compared to surrounding rural areas. The abundance of concrete infrastructure in densely populated urban areas causes these cities to absorb and retain heat, resulting in temperatures that are several degrees higher than the surrounding rural regions. This uncomfortable heat can boost demand for home and commercial air conditioners.

Most urban centers across the world are expanding rapidly as more people migrate to cities for better job opportunities and standard of living. Growing urban population converts green spaces into constructed surfaces, thus, boosting urban heat island effect.

For instance, in September 2021, researchers at Arizona State University discovered that the waste heat released from air conditioning systems had significantly amplified the urban heat island effect by increasing the mean nighttime temperature by 1-1.5°C, thus, intensifying the urban surface temperature.

Market Concentration and Competitive Landscape

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Growth in Tourism

Tourism has become one of the fastest growing economic sectors and an important source of foreign exchange. Hotels, resorts, restaurants and other hospitality infrastructure have proliferated worldwide to accommodate the burgeoning tourism industry. International tourist arrivals have been doubled in the last 20 years and is expected increase steadily in the future. While urban growth brings numerous benefits, it also has a negative impact in the form of increased carbon emissions and a larger carbon footprint, primarily due to the rise in tourism-related activities.

The tourism sector relies greatly on-air travel, and this has witnessed growth in passenger traffic. Airplanes, cruise ships, tourist vehicles all contribute significantly to greenhouse gas emissions. The hospitality industry ensures pleasant indoor conditions through efficient cooling systems for guests amid rising heat stresses owing to climate change. A comfortable stay with functional air conditioning facilities is the foremost demand of customer from tourism infrastructure.

Key Takeaways from Analyst:

Global air conditioning systems market is expected to witness growth in the near future. Rising temperatures due to global warming have increased demand for cooling equipment across both residential and commercial sectors globally. Further regulations on refrigerants can increase compliance costs.

North America region is expected to dominate the market due to hot weather conditions and improving economic conditions. Growth in infrastructure development, real estate sector and rising disposable incomes boosts sales of air conditioning systems.

Market Challenges: High initial costs

The high initial costs associated with air conditioning systems pose a significant barrier to the growth of this market globally. Air conditioners, especially commercial-grade units for large buildings, come with substantial price tags that many individuals and small businesses struggle to afford. Installation can also incur high labour costs that further drive up the total expenditure required. According to the International Labour Organization, over 60% of the global workforce is engaged in the informal sector with irregular or uncertain incomes. For this sizable demographic, shelling out thousands or even tens of thousands of dollars up front for an AC system may simply not be feasible. This renders air conditioning an inaccessible luxury for much of the developing world where demand is still rising.

Market Opportunities: Remote monitoring and IoT integration

Remote monitoring and IoT integration can provide huge growth opportunities for global air conditioning systems market. As energy efficiency and cost optimization become increasingly important, remote monitoring of air conditioning systems and the insights it provides can empower building owners and managers to make more informed decisions, ultimately enhancing their facilities' performance and reducing expenses. Remote monitoring allows real-time monitoring of system performance, faults detection, predictive maintenance alerts, and others, which can significantly reduce downtime.

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Insights By Type: Rooftop segment dominates the market owing to reliability and cost-effectiveness

In terms of type, rooftop segment is estimated to contribute the highest market share of 49.3% in 2024, owing to their unique advantages over other types. Rooftop air conditioners are preferable for large commercial spaces like malls, warehouses, hotels, and others due to their high cooling capacity and flexibility. Unlike other types, rooftop air conditioners can cool large indoor areas efficiently through centralized ducting systems. This centralized cooling mechanism ensures uniform temperature is maintained throughout the indoor space. Rooftop units also take up less floor space as compared to multiple unitary air conditioners required for large areas. This floor space saving proves beneficial for commercial facilities with limited indoor space.

Being installed on the roof, rooftop air conditioners do not obstruct interior floor plans or indoor movement. This makes them suitable for facilities where interior design flexibility and traffic flow is important. Rooftop units also have lower installation and maintenance costs as compared to multiple unitary air conditioners. Some advanced rooftop models come with modular designs which allows convenient replacement of parts without requiring full disassembly of the unit.

Insights By Technology: Inverter segment dominates the market owing to reliability and cost-effectiveness

In terms of technology, inverter segment is estimated to contribute the market share of 67.6% by 2024 due to its enhanced performance and lower running costs. Unlike conventional non-inverters air conditioning systems, the inverter type units use variable-speed compressors which can smoothly adjust cooling output based on room temperature. This allows them to maintain consistent and precise comfort levels within the premises.

The inverter technology also boosts energy efficiency ratings. SEER and EER ratings of inverter air conditioners are nearly 30-50% higher than non-inverter models of comparable capacities due to their ability to run at optimal speeds based on load instead of frequent start-stop cycles. Field data analysis shows inverter units consume up to 40% less electricity over their lifetime as compared to conventional alternatives. Such substantial energy savings prove highly attractive for both residential and commercial consumers looking to optimize operational expenditures.

Inverter air conditioners are known for their extended operational lifespan due to their ability to start and stop smoothly, which reduces mechanical stress on components and minimizes wear and tear. This provides higher return on investment for buyers in the long run. With rising environmental awareness, inverter units have gained popularity for their eco-friendly low carbon footprint.

Insights By End User: Commercial segment dominates the market owing to reliability and cost-effectiveness

In terms of End User, commercial segment is estimated to account for the highest market share of 34.5% by 2024 due to the expansion of the real estate & construction industry as well as rapid growth of tourism sector globally. To cater to the increasing demand from urban populations and tourists, new shopping centers, movie theaters, offices, and hotels are continuously being built and opened worldwide, reflecting the rapid growth and development of urban areas. Proper temperature and humidity control is imperative for commercial spaces housing large customer crowds daily.

Air conditioning systems form a crucial infrastructure in commercial establishments to provide thermally comfortable indoor environment for staff as well as visitors. This assists in improving staff productivity, prolonged equipment functional lifespan and enhancing customer satisfaction levels. Luxury hotels specially make sizable investments in premium commercial air conditioning solutions to offer world-class amenities and differentiate their brands. Organizations are also increasingly adopting centralized and zoned air conditioning systems for improved temperature, ventilation and indoor air quality management in large office campuses.

Technological innovations like WiFi controls, mobile apps and smart sensors have boosted adoption of advanced commercial HVAC solutions. Rising spending on infrastructural development, changing lifestyles and booming service industries can boost the commercial segment’s dominance in air conditioning systems market in the near future.

Regional Insights

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North American region has dominated the global air conditioning systems market with estimated market share of 55.5% in 2024  due to high adoption rate of advanced cooling technologies in both residential and commercial sectors across the U.S. and Canada. North America accounts for over 35% of the world's total HVAC installations due to rising construction activities. Majority of air conditioning equipment exported globally are manufactured by U.S.-based companies such as Carrier, Trane, and Lennox. Their strong distribution network and brand visibility have enabled them to capture significant market share across different regions.

Asia Pacific region is witnessing phenomenal growth and is emerging as the fastest growing market for air conditioning systems worldwide. Rapid urbanization and improving living standards boost demand for space cooling solutions in the residential sector across developing countries like India and China. The rapid economic growth has driven significant infrastructure development and expansion of commercial spaces such as office buildings and retail outlets, thereby boosting the demand for central and ducted air conditioning units. Local manufacturers in Asia are collaborating with global leaders to accelerate technology transfer and address increasing customer needs. This has intensified price-based competition while enabling product innovations suited for tropical climates.

Middle East region is expected to play a vital role in shaping global market dynamics. Majority of countries in GCC rely heavily on energy intensive air conditioning to tackle extreme climatic conditions. Government initiatives aimed at modernizing infrastructure, green building codes, and diversification of economies can drive the market growth. Saudi Arabia and the UAE, major import markets, primarily source advanced air conditioning solutions from American and European suppliers due to the high standards they set for quality and performance. Ongoing projects in the oil & gas, transportation and healthcare industries provide immense opportunities for established international brands to expand their customer base.

Market Report Scope

Air Conditioning Systems Industry News

• On May 23, 2024, Whirlpool Corporation, a multinational manufacturer and marketer of home appliances introduced its new 2024 Air Conditioner range, which leverages 6th Sense IntelliCool Technology to provide a seamless and personalized cooling experience. This innovative technology senses and adjusts to consumers' needs, ensuring that their daily moments are truly enjoyable and comfortable.
• On May 18, 2024, Laneturn Air Conditioning Brand, offering innovative and reliable air conditioning solutions launched its inaugural product, the True Inverter Series Split Air Conditioner, marking a significant milestone in its mission to redefine comfort and reliability in the air conditioning systems market. This series represents a revolutionary leap forward in cooling technology, available in 1-ton, 1.5-ton, and 2-ton variants, engineered to surpass industry standards and offer unparalleled efficiency and performance.
• On April 30, 2024, Johnson Controls-Hitachi Air Conditioning introduced its first cold-climate variable refrigerant flow heat pump in North America. The air365 Max with HeatForce, a top-flow VRF heating and cooling system, offers high efficiency, comfort, and simplified installation and maintenance for professionals, architects, and commercial building owners seeking to minimize operational costs and carbon footprint.
• In March 2023, Daikin Industries, offering a comprehensive range of air conditioning solutions for residential, commercial, and industrial applications introduced its new VRV IV S mini-split air conditioner series in North America, boasting several innovative features such as a more efficient compressor, quieter operation, and a broader range of cooling and heating capacities.

*Definition: Air conditioning systems market consists of companies that manufacture, distribute and install residential and commercial air conditioning systems. This includes central air conditioners, room air conditioners, packaged air conditioners, chillers, air handling units, ducted systems and variable refrigerant flow systems. These systems are used to cool indoor spaces through dehumidification and lowering air temperature. The air conditioning systems market is growing steadily as summers are getting hotter and commercial and residential infrastructure development increases worldwide.

Market Segmentation

•  Type Insights (Revenue, USD Bn, 2019 - 2031)
  • Unitary
  • Rooftop
  • PTAC
•  Technology Insights (Revenue, USD Bn, 2019 - 2031)
  • Inverter
  • Non-Inverter
•  End User Insights (Revenue, USD Bn, 2019 - 2031)
  • Residential
  • Commercial
  • Industrial
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • France
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • Israel
    • South Africa
    • Rest of Middle East & Africa
• Key Players Insights
  • ALFA LAVAL
  • BSH Hausgeräte GmbH
  • Carrier Global Corporation
  • Daikin Industries, Ltd.
  • Electrolux AB
  • Fujitsu General Ltd.
  • Godrej Appliances
  • Haier Group
  • Hitachi Ltd.
  • Jungheinrich AG
  • Lennox International, Inc.
  • LG Electronics
  • Mitsubishi Electric Trane HVAC US LLC
  • Panasonic Holdings Corporation
  • Samsung Electronics Co., Ltd
  • Toshiba Corporation
  • Voltas, Inc.
  • Whirlpool Corporation
  • Wotsco, Inc.
  • Zanotti S.p.A.