Large markets, such as the US, are growing above the global average, while the Chinese market is gaining momentum. European markets continue to be in recovery and will be challenged by political and legislative issues in 2018.
The market is diversifying, with small splits becoming more of a commodity product, which means high levels of competition, although opportunities are opening for new distribution channels. There has been a greater interest in mini VRF and water-based solutions, and a drive towards offering more solutions and smart products at the commercial end.
One of the key challenges over the next few years for global air conditioning is the new refrigerants entering the market place. While the global market saw an overall drop in sales in 2016, primarily due to the impact of the slowdown in China, a recovery has been recorded in 2017 that was better than previously forecasted. This was mainly due to a boost in the Chinese market caused by a hot summer and a focus on an upgrading of air conditioning units, for example, with intelligent solutions such as Wi-Fi.
BSRIA expects the global year-end sales to reach 137 million units and a value of just over USD 102 billion, with packaged products accounting for 85 percent by value.
The market is becoming very competitive and Chinese brands operating outside China, which have traditionally operated as OEM suppliers, are keen to develop their brands. The downturn in sales in China in recent years has meant that the Chinese suppliers have increasingly been looking for overseas opportunities to shift stock.
In the USA, the mature market has experienced good growth boosted by hot summers, a positive economy and construction activities.
The Asia Pacific region continues to account for the largest share with 58 percent of global value. Europe is relatively small as a sales region, accounting for seven percent by volume and 11 percent by value globally, and is only slowly recovering.
David Garwood, market intelligence analyst, BSRIA Worldwide Market Intelligence, said: “Looking at the top 10 air conditioning countries in the world, there has not been much change at the top in terms of ranking. China continues to dominate, followed by the US in second place and then Japan.
“The Chinese market has been boosted by a housing boom with the Government pushing money into their new five year plan, as well as a hot summer which meant restocking at distribution level and incentives to switch to more environmentally friendly units.
“The USA has continued to benefit from a continued positive economy and BSRIA has seen some recovery in the Japanese market. The growth levels we are seeing in these top countries are a positive sign, bearing in mind the maturity of them.
“The significant boost of the South Korean market was a one-off, based on a very hot spell and, as it is a mature market, we are not expecting this to repeat itself under normal weather conditions. Likewise, the Australian market boost is a result of additional construction activities, and BSRIA expects the growth to drop from 2018 and a decline in 2019 for residential products.”
A highly volatile market, global sales by volume increased by 11 percent in 2017, dependent on short term weather patterns. The biggest increase was seen in Asia Pacific, with sales in Australia increasing significantly following a hot summer which was seen in all regions, not just the eastern board.
The global market for windows dropped marginally in 2017, totalling around 11.8 million units. It is losing favour to high wall single splits. Bucking the downward trend in market volume was the USA, which saw an increase in volume by three percent to 7.3 million units.
VRF continues to do well and is expected to reach global sales of just under two million outdoor units in 2017, an increase of over 25 percent from 2016
Overall double digit growth is expected to continue over the next few years, apart from in Europe which is now a fairly mature market. BSRIA is seeing a trend towards more mini VRF as well as some water-cooled VRF going into high-end residential applications, although the capital costs of water-cooled VRF are still viewed as very high. In terms of outdoor units, Europe accounts for just under 10 percent of global sales or 180,000 units. Turkey is the biggest market, followed by France, Italy and the UK.
China continues to dominate the global VRF market, accounting for 65 percent of volume sales, with units popular in both the residential and commercial markets. In particular, mini VRF are expected to continue to see a positive growth rate in China as the middle classes are looking to replace conventional splits with mini VRF units.
Mr Garwood added: “Recent years have seen an increasing interest in VRF in the USA and the country remains in fourth position in the market with sales reporting as close to 50,000 outdoor units in 2017. However, due to the current limited geographical focus for these products and the slowdown in the market for residential multi-family homes, accounting for 20 percent of sales, there is a view that the market may hit a bit of a bottleneck.”