[Research Report] The HVAC Equipment market is expected to grow from US$ 205.17 billion in 2022 to US$ 321.84 billion by 2030; it is estimated to grow at a CAGR of 5.8% from 2022 to 2030.
Analyst Perspective:
The HVAC equipment market has been growing at a rapid pace in recent years, driven by rising demand for cooling across industrial, residential, and commercial places. HVAC system offers air conditioning for the buildings with the use of the air conditioning systems. HVAC equipment is widely used in several industries, including automotive, pharmaceuticals, electronics, semiconductors, aerospace & defense, food & beverages, and others. Thus, increased demand for distributed cooling systems in these industries is boosting the global HVAC equipment market growth. Moreover, increasing disposable income, rapid urbanization, and a rise in the temperature owing to global warming are propelling the market growth. Further, increasing investment towards new construction activities of the residential and commercial spaces with growing public infrastructure is expected to create massive demand for the HVAC equipment market growth.
Market Overview:
The definition of HVAC equipment market consists of several components, including air conditioners, compressors, electric fan heaters, heaters, commercial dehumidifiers, warehouse fans, man cooler fans, ventilation fans, evaporative coolers, portable boilers, extractor fans, and fan coil units.
The heating, ventilation, and air conditioning equipment industry is the technology equipment that offers comfort within a confined space. The equipment provides thermal comfort and acceptance of clean air within that environment. The HVAC equipment market uses modern technology. HVAC systems are also used in the automotive industry for air conditioning in cars, airplanes, trains, and ships. In manufacturing industrial plants, the central air conditioning system is used to provide ventilation in a confined space and provide fresh air for the people in the industrial areas.
Strategic Insights
Market Driver:
Increased Demand for HVAC Systems Across Commercial Buildings, Offices and Residential Apartments to Drive Growth of the HVAC Equipment Market
HVAC equipment plays a vital role in maintaining the required temperature of the spaces. The HVAC system is used to remove the heat and transfer it somewhere else. These chillers can be utilized in numerous residential and commercial spaces, for example, small to large size rooms, garages, basements, and crawlspaces. The popularity of HVAC systems offers various advantages, including convenience, portability, and quick and easy maintenance. Moreover, the adoption of HVAC equipment is rising in restaurants, kitchens, hotels, and dining rooms to handle the concerns regarding temperature levels. Other industry verticals where these chillers are used are rubber, petrochemicals, medical, plastic, commercial office buildings, sports venues, and others. Government bodies are putting additional emphasis on strengthening construction and infrastructural development activities, which propelling the HVAC equipment market. As per the Global Construction Industry Report in 2022, it is estimated that the volume of construction output related to commercial buildings, residential and industrial is expected to reach around US$ 15.5 trillion by 2030 worldwide. The US, China, and India are contributing to have the largest share and are growing with the highest CAGR during the forecast period.
The growing aviation sector and increasing construction of new commercial buildings drive the demand for the HVAC. This industry uses various chillers, vapor compressor that make uses screw compressor for transporting the coolant through the system. These systems are suitable for high-rise buildings considering quiet operation, compact installation, high energy efficiency and lower maintenance costs. The growing real estate sector all over the region and rising requirements for cooling and heating systems across residential users are driving the HVAC equipment market.
The COVID-19 pandemic has created awareness among individuals to improve indoor air quality and created massive demand for HVAC systems that help to promote clean ventilation. Increasing global warming and rising demand for ventilation using air conditioning across public spaces are expected to create ample opportunity for market growth.
Cooling represents 50% of HVAC equipment’s revenue. Rising construction activities of retail stores, hospitality, new housing, and commercial buildings are creating massive demand for the HVAC equipment market. Further, increasing government support for building public places such as metros, new rail infrastructure, and government offices is creating massive demand for the HVAC equipment growth. Several countries' governments are offering tax benefits for energy-efficient HVAC equipment. Strict government regulations for reducing energy consumption and carbon emissions are creating massive demand for the HVAC equipment market.
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Segmental Analysis:
Based on type, the market is segmented into central and decentralized. The central segment held the largest share of the market in 2022, whereas the decentralized is projected to register the highest CAGR in the market during the forecast period. The central system has significant usage in the new commercial buildings, retail stores, malls, hypermarkets, and supermarkets. Increasing investment towards the new constructions of commercial buildings with the surge in government support for building the public infrastructure has created a massive demand for the central HVAC system. This industry has shown significant demand in recent years amid the COVID-19 pandemic. Rising consumer awareness towards clean air quality and increasing requirement for hygiene is expected to create ample opportunity for this market growth. The central HVAC system is used in several areas, including retail grocery stores, industrial plants, hotels, & restaurants, malls and many others.
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Regional Analysis:
The Asia Pacific market for the HVAC equipment market is expected to dominate in terms of revenue. With growing education and literacy levels, awareness regarding the benefits of modern technologies such as HVAC types of equipment is also increasing considerably. Asia Pacific is growing significantly with rising construction activities, the surge in government investment toward building public infrastructure, and the surge in investment towards commercial buildings. According to the India Brand Equity Foundation Organization, the Indian government announced an investment of around US$ 1.4 trillion for the establishment of public infrastructure and buildings. Such huge investment for new construction activities in India is expected to create ample opportunity for the HVAC equipment market. In this region, the HVAC equipment market consists of more than 1,400 companies, employs more than 133,500 workers and generates US$ 45 billion annually. The HVAC equipment market is moderately concentrated, with around 50 largest companies representing around 60% of the industry’s revenue. Some of the large companies in the Asia Pacific region include Daikin Group, Carrier Corporation, Lennox International, Trane Johnson Controls, and Rheem.
Europe is growing at a moderate pace owing to its elevated standard of living and higher income levels. Further, there is a rising demand for housing in the UK because of cuts in stamp duty on the sales of new homes. In addition to this, increasing disposable income, growing urbanization and industrialization, new chiller product popularity, and strict government norms focused on global warming are triggering the production and adoption of the HVAC equipment market.
North America is growing rapidly owing to increasing funding for ventilation, heating and air conditioning systems by the government authorities, schools and institutes. In the United States, the demand for HVAC equipment is from several customers, including commercial building contractors, residential builders, local dealers, retailers, government institutes, and institutional and industrial customers. In the country several countries offer this equipment, and some of the companies include Ferguson, Ace Hardware, Hajoca (EMCO), MRC Global, Watsco, HD Supply, and many others.
Further, rising government funding and initiatives for improving the government infrastructure, schools and institutes post-COVID-19 pandemic are driving the HVAC equipment market in this region. In December 2020, the US government announced an investment of around US$ 82 billion for improving the air conditioning, ventilation and air quality equipment for the schools in the country. Further, the US is importing HVAC equipment from several countries, including Mexico, China, and Canada, followed by Germany, Thailand, and South Korea.
Key Player Analysis:
The HVAC equipment market analysis consists of players such as Carrier Global Corporation, Nortek Global HVAC, Trane HVAC US LLC, Honeywell International, Inc., Danfoss AS, Emerson Electric Co., LG Electronics Inc., Mitsubishi Electric, Daikin Industries, Ltd., and Hitachi-Johnson Controls Air Conditioning, Inc. and among others. Among these players in the HVAC equipment market are the Carrier Global Corporation, Danfoss AS, Hitachi Air Conditioning Company, and Daikin Industries, Ltd, which are the top players owing to the diversified product portfolio offered.
Recent Developments:
The companies are adopting several strategies, including energy-efficient equipment launches, partnerships, collaborations, mergers and acquisitions in the HVAC equipment market. A few recent key market developments are listed below:
- In September 2023, Hitachi-Johnson Controls Air Conditioning, Inc. launched the Hitachi Air 365 Hybrid fuel system. It comprises heat pumps and furnaces for providing energy efficiency and economical home comfort by reducing carbon emissions. The Air 365 Hybrid system consists of an electric heat pump Hitachi Mini VRF as the primary cooling and heating source and a dual fuel module.
- In February 2023, Danfoss AS launched an advanced technology-based FC VLT HVAC system that offers critical function-based monitoring. This system offers activities in HVAC systems using sensors and facilitates alerts to the managers for maintenance issues.
- In February 2023, Johnson Controls, an Irish-domiciled multinational conglomerate that produces fire, HVAC, and security equipment for buildings, announced the launch of the industry-first use of low-GWP refrigerants in scroll and free-cooling screw chillers for the US market. By adopting these eco-friendly refrigerants, the company not only contributes to a greener future but also sets an example for other businesses in the region. Thus, such business strategies may create promising growth opportunities for the HVAC systems market.