The Air Conditioners Market is projected to grow at a CAGR of 5.6% from 2024 to 2031. The market value is expected to increase from XX USD in 2024 to YY USD by 2031. Asia-Pacific is anticipated to be the dominant region in this market. Key metrics include increasing urbanization, rising disposable incomes, and growing awareness of energy-efficient cooling solutions.
Climate change, rising global temperatures, urbanisation, and technological advancements in energy-efficient cooling systems are all driving continuing growth in the air conditioner industry. Smart and connected air conditioning solutions are in high demand in the residential, commercial, and industrial markets.
Market Trend: Shift Towards Smart and Energy-Efficient Air Conditioning Systems
The air conditioning industry is rapidly evolving towards smarter, more energy-efficient systems. This trend is being driven by growing energy costs, increased environmental awareness, and the incorporation of Internet of Things (IoT) technologies into domestic appliances. Manufacturers are developing air conditioners that incorporate cutting-edge technologies such as Wi-Fi connectivity, voice control, and artificial intelligence-powered energy management.
Recent improvements, for example, include air conditioners that can be controlled remotely via smartphone apps, allowing users to adjust settings and save energy. Some newer models incorporate AI algorithms to learn user preferences and automatically adjust cooling patterns, resulting in greater comfort and energy efficiency. According to the industry experts, the global smart air conditioner market is expected to grow at a CAGR of more than 14% between 2021 and 2026.
Furthermore, there is a greater emphasis on energy efficiency ratings such as SEER (Seasonal Energy Efficiency Ratio) in the United States and EER (Energy Efficiency Ratio) in Europe. Governments all over the world are demanding stricter energy efficiency standards for air conditioners, prompting manufacturers to innovate and provide more efficient cooling solutions. As an example, consider the United States. The Department of Energy has mandated higher minimum SEER ratings for air conditioners beginning in 2023, which is expected to encourage the use of more energy-efficient units.
Market Driver: Rising Global Temperatures and Urbanization
Rising worldwide temperatures as a result of climate change and greater urbanisation are driving the air conditioning market. According to the World Meteorological Organisation, global temperatures have risen by around 1.1°C since the pre-industrial era, and this trend is expected to continue. The rise in temperature, along with more frequent and destructive heatwaves, is fuelling global demand for cooling systems.
Urbanisation is another major factor driving market growth. The United Nations projects that by 2050, 68% of the global population will live in cities, up from 55% in 2018. The heat island effect raises temperatures in metropolitan areas, increasing the demand for air conditioning. In rapidly developing countries like China and India, the growing middle class and rising disposable incomes are pushing air conditioner consumption in both home and commercial settings.
Furthermore, the COVID-19 pandemic has boosted awareness about indoor air pollution, increasing demand for air conditioners with advanced air filtering capabilities. Many manufacturers now incorporate HEPA filters, UV sterilisation, and other air purification technology into their air conditioning units to solve both cooling and air quality concerns.
Market Restraint: Environmental Concerns and Regulations on Refrigerants
Environmental problems and refrigerant regulations present significant challenges to the air conditioning industry. Traditional refrigerants for air conditioners, such as HCFCs and HFCs, have a high global warming potential (GWP) and contribute to climate change. As a result, governments around the world are establishing strict regulations to phase out these refrigerants.
The Kigali Amendment to the Montreal Protocol, which becomes effective in 2019, aims for a gradual reduction in HFC production and consumption. This has pushed manufacturers to create and use low-GWP alternative refrigerants such hydrofluoroolefins (HFOs) and natural refrigerants like propane and CO2. However, transitioning to these new refrigerants typically entails significant changes in air conditioner design and manufacturing procedures, which raises production costs.
Furthermore, the higher initial cost of environmentally friendly air conditioners may discourage price-sensitive purchasers, particularly in emerging economies. According to industry estimates, air conditioners using low-GWP refrigerants may cost 10-30% more than typical models. This price differential, combined with the need for specialised maintenance and handling of new refrigerants, provides impediments to widespread adoption.
Furthermore, the disposal and recycling of obsolete air conditioning equipment containing dangerous refrigerants pose environmental dangers. Many countries lack the necessary infrastructure for proper disposal and recycling of these devices, posing potential environmental dangers. The combination of regulatory requirements, transition costs, and environmental concerns about refrigerants may stymie market growth and diminish profit margins in the air conditioning industry.
The Split AC segment is expected to dominate the Air Conditioners Market:
Split AC is predicted to account for the largest market share in the air conditioning industry. This dominance is attributed to a number of factors, including energy efficiency, aesthetic appeal, and installation versatility.
Split air conditioners are more energy-efficient than regular window units. They frequently have higher SEER ratings, resulting in decreased energy use and lower electricity bills for customers. The global split AC market was valued $YY billion in 2024 and is expected to grow to $YY billion by 2031, with a 7.7% CAGR during the projected period.
Split air conditioners are also popular due to their attractive appearance. Split air conditioners, unlike window units, have a sleeker design with the compressor unit positioned outside, allowing for better integration with interior decor. This feature is especially appealing in urban settings where space is limited and aesthetics are important.
Furthermore, split air conditioners offer more installation options. They can be utilised in rooms with no windows or when window units are not an option. This versatility makes them suitable for a wide range of applications, from small apartments to large commercial venues. Split air conditioning systems are becoming common in the commercial sector, particularly in office buildings, retail spaces, and hotels.
Split air conditioners have become increasingly common as technology has evolved. Many new split AC units have inverter technology, which allows the compressor to run at different speeds, resulting in even greater energy savings. Some high-end versions include air filtration and smart connectivity features, meeting the growing customer demand for multifunctional and connected home appliances.
The Asia-Pacific region, specifically China, India, and Japan, has the largest market for split air conditioners. The hot and humid weather in many parts of the region, combined with increased disposable incomes and rapid urbanisation, is driving up demand for split air conditioners. For example, in India, the split AC market is growing at a rate of 10-12% per year, outpacing overall AC industry development.
Asia-Pacific is expected to dominate the Air Conditioners Market
Asia-Pacific is likely to maintain its lead in the air conditioners market during the forecast period. Rapid urbanisation, increased disposable incomes, harsh weather, and the presence of big manufacturing hubs all contribute to the region's success.
China and India, the world's two most populous countries, are the primary drivers of growth in the Asia-Pacific air conditioning industry. China is the world's largest producer and consumer of air conditioners. The China Household Electrical Appliances Association predicts that room air conditioner output in China would reach 218.7 million units in 2020, accounting for more than 70% of global production.
According to our estimates, Asia-Pacific accounts for 55-60% of the global air conditioning market. Over the last three years, the region's air conditioner sales have grown by 8-10% per year. This economic trend is expected to continue, fuelled by ongoing urbanisation and the expansion of the middle class in nations like India, Indonesia, and Vietnam.
In India, the air conditioning market is fast growing. According to the Indian Society of Heating, Refrigerating, and Air Conditioning Engineers (ISHRAE), the Indian air conditioning market is expanding at a 15-20% CAGR, with room air conditioners accounting for more than 80% of total market share. The government's promotion of energy-efficient products, such as the Bureau of Energy Efficiency's star rating system, is hastening the adoption of new air-conditioning technologies.
Japan, a country known for its technological accomplishments, is a key player in the development of energy-efficient and intelligent air conditioning systems. Japanese companies like Daikin, Mitsubishi Electric, and Panasonic are global leaders in air conditioning technology, particularly in the development of inverter air conditioners and environmentally friendly refrigerants.
Southeast Asian countries such as Indonesia, Thailand, and Vietnam are also significantly contributing to market growth. The hot and humid climate in these countries, combined with rising living standards, is driving up demand for air conditioning systems. For example, Vietnam's air conditioner market is growing at a rate of 15-20% per year, driven by greater urbanisation and more foreign investment in the country.
The region's emphasis on energy efficiency and environmental sustainability is affecting the air conditioning industry. Many Asian-Pacific countries have adopted or are planning to establish minimum energy performance standards (MEPS) for air conditioners. For example, Singapore's National Environment Agency has set high energy efficiency criteria for air conditioners, encouraging the adoption of inverter technology and other energy-saving features.
The air conditioners sector is defined by the presence of numerous significant international and regional competitors, creating a highly competitive environment. To maintain their market positions, important players focus on product innovation, energy efficiency, and expansion into emerging markets.
Market leaders such as Daikin Industries, Ltd., Gree Electric Appliances, Inc., and Midea Group have established strong footholds by offering a varied range of air conditioning solutions to different client groups and geographic regions. These companies have effectively exploited their extensive R&D skills to develop unique products that meet evolving customer demands and regulatory constraints.
In terms of market share, the top five rivals account for 40-45% of the global air conditioning market. However, the industry is getting more competitive, especially in the Asia-Pacific area, where new companies are gaining market share through competitive pricing and localised product offerings.
According to recent financial reports, the market's leading competitors have seen an average annual revenue growth of 5-7% in their air conditioning divisions over the last three years. This growth is mostly attributable to rising demand in emerging markets and the greater usage of energy-efficient and smart air conditioning systems.
Mergers and acquisitions have been a key strategy for market expansion. For example, in 2019, United Technologies Corporation (now part of Raytheon Technologies) completed the acquisition of Carrier Global Corporation, increasing its foothold in the HVAC industry. Such strategic actions are anticipated to alter the competitive landscape in the coming years.
Moving forward, the market is expected to place a higher emphasis on developing environmentally friendly air conditioning solutions, such as the utilisation of alternative refrigerants and renewable energy resources. Companies are also investing in Internet of Things and artificial intelligence technology to increase product performance and energy efficiency.
The air conditioning market is at a critical point, with both significant opportunities and challenges. The industry landscape is being transformed by the combination of technological developments, environmental concerns, and altering customer tastes.
One of the most important trends to watch is the integration of artificial intelligence and Internet of Things technologies into air conditioning systems. These smart air conditioners are intended to create intelligent cooling ecosystems that can predict client preferences, optimise energy consumption, and communicate with other smart home equipment, rather than simply providing remote control via smartphone. As 5G networks develop, we may expect even more complex linked AC solutions that offer predictive maintenance and real-time energy management.
Another noteworthy improvement is the industry's attitude towards environmental issues. The switch to low-GWP refrigerants is just the start. More advancements in refrigerant technology are expected, including the widespread use of natural refrigerants such propane in residential systems. Furthermore, the concept of 'cooling as a service' is gaining traction, in which firms provide cooling solutions on a subscription basis, potentially reducing environmental impact through better maintenance and end-of-life management of air conditioners.
The role of air conditioners in public health is increasing, particularly in the aftermath of the COVID-19 pandemic. There is growing interest in air conditioning systems that not only cool but also purify the air, which may incorporate UV sterilisation and advanced filtering technologies. This trend may result in the convergence of the air cooling and purification markets.
Energy efficiency will be a main focus. District cooling systems, in addition to boosting the efficiency of individual units, are becoming increasingly popular, particularly in urban areas. These centralised systems can save significantly more energy than individual air conditioners and may become more widespread in smart city initiatives.
Finally, the industry is projected to experience increased customisation and modularisation of air conditioning systems. As consumers grow more conscious of their own cooling needs, there is a prospect of more tailored systems that may be easily enhanced or updated over time.
Finally, the air conditioning sector is constantly evolving due to technological improvements, environmental concerns, and increasing consumer expectations. Companies that successfully combine innovation, sustainability, and affordability are likely to emerge as market leaders in this rapidly changing environment.
Daikin Industries, Ltd.
Gree Electric Appliances, Inc.
Midea Group
Samsung Electronics Co., Ltd.
LG Electronics Inc.
Carrier Global Corporation
Mitsubishi Electric Corporation
Panasonic Corporation
Hitachi-Johnson Controls Air Conditioning, Inc.
Haier Group Corporation
August 2024: Daikin Industries develops a new line of air conditioners that employ a proprietary low-GWP refrigerant, reducing environmental impact while retaining excellent energy efficiency.
In May 2024, Samsung Electronics unveiled an AI-powered air conditioning system that uses predictive analytics to increase cooling performance and energy efficiency in smart homes.
1. INTRODUCTION
1.1. Market Definitions & Study Assumptions
1.2. Market Research Scope & Segment
1.3. Research Methodology
2. EXECUTIVE SUMMARY
2.1. Market Overview & Insights
2.2. Segment Outlook
2.3. Region Outlook
3. COMPETITIVE INTELLIGENCE
3.1. Companies Financial Position
3.2. Company Benchmarking -- Key Players
3.3. Market Share Analysis -- Key Companies
3.4. Recent Companies Key Activities
3.5. Pricing Analysis
3.6. SWOT Analysis
4. COMPANY PROFILES (Key Companies list by Country) (Premium)
5. COMPANY PROFILES
5.1. Daikin Industries, Ltd.
5.2. Gree Electric Appliances, Inc.
5.3. Midea Group
5.4. Samsung Electronics Co., Ltd.
5.5. LG Electronics Inc.
5.6. Carrier Global Corporation
5.7. Mitsubishi Electric Corporation
5.8. Panasonic Corporation
5.9. Hitachi-Johnson Controls Air Conditioning, Inc.
5.10. Haier Group Corporation (LIST NOT EXHAUSTIVE)
6. MARKET DYNAMICS
6.1. Market Trends
6.1.1. Shift Towards Smart and Energy-Efficient Air Conditioning Systems
6.1.2. Integration of AI and IoT in Air Conditioning Technology
6.1.3. Growing Demand for Air Purification Features
6.2. Market Drivers
6.2.1. Rising Global Temperatures and Urbanization
6.2.2. Increasing Disposable Income in Emerging Markets
6.2.3. Technological Advancements in Energy Efficiency
6.3. Market Restraints
6.3.1. Environmental Concerns and Regulations on Refrigerants
6.3.2. High Initial Costs of Energy-Efficient Systems
6.4. Market Opportunities
6.5. Porter's Five Forces Analysis
6.5.1. Threat of New Entrants
6.5.2. Bargaining Power of Buyers/Consumers
6.5.3. Bargaining Power of Suppliers
6.5.4. Threat of Substitute Products
6.5.5. Intensity of Competitive Rivalry
6.6. Supply Chain Analysis
6.7. Value Chain Analysis
6.8. Trade Analysis
6.9. Pricing Analysis
6.10. Regulatory Analysis
6.11. Patent Analysis
6.12. SWOT Analysis
6.13. PESTLE Analysis
7. BY PRODUCT TYPE (MARKET SIZE/VALUE (US$ Mn), SHARE (%), MARKET FORECAST (%), YOY GROWTH (%)-- 2020-2031)
7.1. Split AC
7.2. Window AC
7.3. Portable AC
7.4. Central AC
8. BY TECHNOLOGY (MARKET SIZE/VALUE (US$ Mn), SHARE (%), MARKET FORECAST (%), YOY GROWTH (%)-- 2020-2031)
8.1. Inverter
8.2. Non-Inverter
9. BY END-USER (MARKET SIZE/VALUE (US$ Mn), SHARE (%), MARKET FORECAST (%), YOY GROWTH (%)-- 2020-2031)
9.1. Residential
9.2. Commercial
9.3. Industrial
10. BY DISTRIBUTION CHANNEL (MARKET SIZE/VALUE (US$ Mn), SHARE (%), MARKET FORECAST (%), YOY GROWTH (%)-- 2020-2031)
10.1. Online
10.2. Offline
11. REGION (MARKET SIZE/VALUE (US$ Mn), SHARE (%), MARKET FORECAST (%), YOY GROWTH (%)-- 2020-2031)
11.1. North America
11.1.1. United States
11.1.2. Canada
11.1.3. Mexico
11.2. South America
11.2.1. Brazil
11.2.2. Argentina
11.2.3. Rest of South America
11.3. Europe
11.3.1. Germany
11.3.2. United Kingdom
11.3.3. France
11.3.4. Italy
11.3.5. Spain
11.3.6. Russia
11.3.7. Rest of Europe
11.4. Asia-Pacific
11.4.1. China
11.4.2. Japan
11.4.3. India
11.4.4. Australia
11.4.5. South Korea
11.4.6. Rest of Asia-Pacific
11.5. Middle-East
11.5.1. UAE
11.5.2. Saudi Arabia
11.5.3. Turkey
11.5.4. Rest of Middle East
11.6. Africa
11.6.1. South Africa
11.6.2. Egypt
11.6.3. Rest of Africa
*NOTE: All the regions mentioned in the scope will be provided with (MARKET SIZE/VALUE (US$ Mn), SHARE (%), MARKET FORECAST (%), YOY GROWTH (%)-- 2020-2031)
By Product Type:
Split AC
Window AC
Portable AC
Central AC
By Technology:
Inverter
Non-Inverter
By End-User:
Residential
Commercial
Industrial
By Distribution Channel:
Online
Offline
By Region:
North America
Europe
Asia-Pacific
Latin America
Middle East & Africa
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