International. BSRIA's recently published market intelligence study shows that the global air conditioning (AC) market is in recovery. Large markets, such as the US, are growing "well above the global average", while the Chinese market is "picking up". However, European markets continue to recover and will be questioned by political and legislative issues in 2018.
Small divisions are increasingly becoming a commodity, which means high levels of competition, but opportunities are opening up for new distribution channels. Increased interest in mini VRF and water-based solutions and a push to offer more smart solutions and products to add value at the commercial end.
One of the main challenges in the coming years for global air conditioning is the entry of new refrigerants into the market.
While the global market recorded an overall drop in sales in 2016, mainly due to the impact of the slowdown in China, there was a recovery in 2017 that was better than previously forecast. This was mainly due to a boost in the Chinese market caused by a hot summer and a focus on upgrading air conditioning units, for example with smart solutions such as Wi-Fi.
BSRIA expects year-end global sales to reach 137 million units and a value of just over $102 billion, with packaged goods accounting for 85 percent in value.
The market is becoming very competitive and Chinese brands operating outside of China have traditionally operated as OEM suppliers also want to develop their brands. The slowdown in sales in China in recent years has meant that Chinese suppliers have been increasingly looking for opportunities abroad to "change their stocks".
In the United States, the otherwise mature market has experienced good growth. The market has been driven by hot summers, a positive economy and construction activities.
The Asia-Pacific region continues to account for the largest share, accounting for 58 percent of global value. Europe is relatively small as a sales region, accounting for 7% in volume and 11% in value globally and is only slowly recovering.
David Garwood, Market Intelligence Analyst, BSRIA Worldwide Market Intelligence, said: "Looking at the top 10 AC countries in the world, there hasn't been much change at the top in terms of ranking. China continues to dominate, followed by the US in second place and then in Japan.
The Chinese market has been driven by a housing boom with the government pushing money toward its new five-year plan, as well as a hot summer that meant replenishment at the distribution level and incentives to switch to more environmentally friendly units.
The US has continued to benefit from a continued positive economy and BSRIA has seen some recovery in the Japanese market. The levels of growth we are seeing in these major countries are a positive sign considering the maturity of them.
The significant boost from the South Korean market was one based on a very hot wave and as it is a mature market, we do not expect this to be repeated under normal weather conditions. Similarly, the australian market momentum is the result of additional construction activities and BSRIA expects growth to fall from 2018 and a decline in 2019 for residential products."
Market research
Movable: This is a highly volatile market, with global sales by volume up 11 percent in 2017, depending on short-term weather patterns. The biggest increase was seen in Asia Pacific, and sales in Australia increased significantly after a hot summer that was seen in all regions, not just the eastern one.
Window: The global window equipment market fell marginally in 2017, totaling around 11.8 million units. It's losing favor with individual high-wall splits. "Against the downward trend" in market volume was the United States, which saw an increase in volume from 3 percent to 7.3 million units.
VRF: VRF continues to perform well and is expected to achieve global sales of just under two million outdoor units in 2017, an increase of more than 25 percent over 2016.
Overall double-digit growth is expected to continue in the coming years, in addition to Europe, which is now a fairly mature market. BSRIA is seeing a trend towards more mini VRF as well as some water-cooled VRFs that target high-end residential applications, however, the capital costs of water-cooled VRF are still considered very high. In terms of outdoor units, Europe accounts for just under 10 percent of global sales or 180,000 units. Turkey is the largest market, followed by France, Italy and the United Kingdom.
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 VRFs are expected to continue to see a positive growth rate in China as the middle classes are looking to replace conventional divisions with mini VRF units.
Source: BSRIA.
