Air Conditioning (AC) Market Analysis APAC, Europe, North America, Middle East and Africa, South America - China, US, Japan, Germany, South Korea - Size and Forecast 2024-2028

Air Conditioning (AC) Market Size 2024-2028

The air conditioning (AC) market size is forecast to increase by USD 14.8 billion, at a CAGR of 2.15% between 2023 and 2028. Market expansion hinges on multiple factors. Firstly, the surge in residential construction activities amplifies the demand for AC systems, reflecting a growing need for indoor comfort solutions. Secondly, product innovation drives portfolio extension and premiumization, with manufacturers introducing advanced features and designs to meet evolving consumer preferences. This includes the integration of smart technologies and energy-efficient options. Additionally, the escalating demand for inverter air conditioners underscores a shift towards more environmentally friendly and cost-effective cooling solutions. These trends collectively shape the trajectory of the market, emphasizing the significance of innovation and responsiveness to consumer demands in ensuring sustained growth and market relevance. It also includes an in-depth analysis of market trends and analysis, market growth analysis and challenges. Furthermore, the report includes historic market data from 2018 - 2022.

What will be the Size of the Market During the Forecast Period?

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Market Dynamic and Customer Landscape

The AC business encompasses a wide range of products, including Smart air conditioners and both Packaged and Room models. These AC units are increasingly being adopted in various sectors such as Residential buildings, Office buildings, Retail spaces, and Healthcare facilities, due to rising Global temperatures and Urban heat. As the world becomes more ecologically conscious, there is a growing demand for goods that are not only Energy efficient but also made from Recycled materials. Developing nations, in particular, are undergoing Urbanization at an unprecedented rate, leading to a surge in demand for Commercial space cooling solutions. Advancements in technology have led to the emergence of NanoeX technology and Smart technology in AC units. User comfort is a top priority, and these innovations offer features such as Air filtration systems, Humidity levels control, and Allergens and Pollutants removal. With the widespread use of Smartphones, users can now remotely control their AC units for optimal comfort. The market caters to both the Residential and Commercial segments, with offerings ranging from Room AC Windows models to Split AC units. 

Key Market Driver

The rise in residential construction activity is notably driving market growth. The global AC business has experienced remarkable growth in recent years, driven by factors such as low-interest rates, rising demand for affordable housing, and government initiatives. This trend is expected to continue, with direct investment in real estate reaching USD 9.6 trillion in 2019. In response to increasing global temperatures and urban heat, there is a growing need for AC systems in residential and commercial buildings, including offices, retail spaces, healthcare facilities, data centers, and manufacturing plants. Technological advancements, such as smart air conditioners and inverter technology, have led to the development of energy-efficient designs and Energy Efficiency Standards.

Further, the market for AC units, including window AC, split, multi-split, central AC, inverter, and non-inverter technology, is expanding in both developed and developing nations due to urbanization and the changing climate. Multi-brand stores, exclusive stores, and online stores offer a wide range of options for consumers seeking energy-efficient solutions, ecologically conscious goods, and advanced features like nanoeX technology and smart technology. Recycled materials and improved indoor air quality are also becoming important considerations in the market. Allergens and energy efficiency are key concerns for consumers in the market for air conditioners. Thus, the increasing demand for inverter air conditioners to save energy will drive the growth of the market during the forecast period.

Significant Market Trends

An increase in the use of R32 refrigerant in split ACs is an emerging trend in market growth. In the AC business, refrigerants play a crucial role in providing cooling and refrigeration. Smart air conditioners and various types, such as packaged and room models, employ different refrigerants to meet energy efficiency standards and mitigate environmental impact. Global temperatures and urban heat necessitate the use of eco-friendly refrigerants like R32, which reduces electricity consumption and CO2 emissions by up to 10% compared to R-410A and R-22. Residential and office buildings, retail spaces, healthcare facilities, data centers, and manufacturing plants rely on energy-efficient AC systems.

Moreover, inverter technology and energy-efficient designs are integral to modern AC units, including window ACs, split, multi-split, and central ACs. Inverter technology enables energy savings, while non-inverter technology remains an option for budget-conscious consumers. Technological advancements, such as energy efficiency standards, nanoeX technology, and smart technology, contribute to the market's growth. Recycled materials and ecologically conscious goods are increasingly popular in developing nations, driven by urbanization and the need for commercial space. Allergens and indoor air quality concerns further emphasize the importance of energy efficiency and air conditioners in our changing climate. Thus, these factors will boost the growth of the market during the forecast period.

Major Market Challenge

Volatility in operating costs and raw material prices is a major challenge impeding The AC business is influenced by numerous factors, including the cost of raw materials for manufacturing smart air conditioners, such as steel, iron, plastic, glass, electronic equipment, petroleum products, and paints. Global temperatures and urban heat drive the demand for AC systems in residential buildings, office buildings, retail spaces, healthcare facilities, data centers, and manufacturing plants. Inverter technology and energy efficient designs are essential for energy efficiency and compliance with Energy Efficiency Standards.

Further, the market offers various types of AC units, including window AC, split, multi split AC, and central AC, using inverter and non-inverter technology. Technological advancements, such as NanoeX technology and smart technology, and the use of recycled materials contribute to energy efficiency, indoor air quality, and ecologically conscious goods. Developing nations and urbanization increase the demand for commercial space, driving the growth of the AC market. Changing climate patterns necessitate energy-efficient solutions for both residential and commercial applications. Thus, these factors will hinder the market growth and trends during the forecast period.

Customer Landscape

The market forecasting report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and forecasting strategies.

Market Customer Landscape

Key Companies & Market Insights

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

LG Electronics Inc. - The company offers technology and consumer electronics such as home appliance and air solutions, home entertainment, vehicle component solutions, and business solutions.

The research report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:

• Blue Star Ltd.
• Daikin Industries Ltd.
• DeLonghi Group
• Electrolux group
• Emerson Electric Co.
• Fujitsu Ltd.
• Haier Smart Home Co. Ltd.
• Hitachi Ltd.
• Honeywell International Inc.
• Johnson Controls International Plc.
• MIDEA Group Co. Ltd.
• Mitsubishi Electric Corp.
• Panasonic Holdings Corp.
• Samsung Electronics Co. Ltd.
• Trane Technologies Plc
• Transform Holdco LLC
• Toshiba Corp.
• Voltas Ltd.
• Whirlpool Corp.

Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

Market Segmentation 

The market size growth by the splits segment will be significant during the forecast period. The segment is growing as energy-efficient and stylish split air conditioners are replacing window units. To meet the rising demand from customers, suppliers like Samsung have stopped making window air conditioners in favor of split air conditioners. Due to their effectiveness, inverter-based splits are also becoming more popular.

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The splits segment was valued at USD 97.60 billion in 2018. Due to their ease of installation, simultaneous heating and cooling effects, accurate temperature control, and energy efficiency, split air conditioners are preferred by most people over traditional window air conditioners. Additionally, split air conditioners are quieter than window air conditioners because the compressor and fan are built into the outdoor unit. While split air conditioners' outdoor units are usually positioned in a shaded, airy area, which facilitates good airflow in the room, window air conditioners are occasionally exposed to direct sunlight.   Thus, due to the abovementioned factors, the demand for split ACs is increasing, which in turn will drive the growth of the market during the forecast period.

Regional Analysis

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APAC is estimated to contribute 47% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The market in APAC is experiencing significant growth due to increasing disposable incomes and the desire for user comfort. Pollutants and humidity levels have driven the demand for advanced air filtration systems in both residential and commercial segments. Smartphones and online retail have facilitated easy access to information and purchasing of various types of AC units, including Room ACs with windows, Split ACs, Ducted ACs, Ductless ACs, Centralized AC, VRF, and Chillers. The Residential segment is witnessing rapid growth, with India expected to lead, owing to urbanization and rising incomes. The Commercial segment also presents opportunities, with innovations in Manual and Automatic technology, Product launches, Mergers and acquisitions, Collaborations and partnerships shaping the market landscape. Direct Sales and Distribution Sales channels are also prevalent. The Industrial sector is another potential market for AC solutions. Such factors are expected to drive the regional market growth during the forecast period. 

Segment Overview

The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.

• Product Outlook 
  • Splits
  • Chillers
  • Airside
  • Others

• Distribution Channel Outlook
  • Offline
  • Online

• Region Outlook
  • North America
    • The U.S.
    • Canada
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa
  • South America
    • Chile
    • Brazil
    • Argentina

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Market Analyst Overview 

The market encompasses a wide range of products and services designed to provide comfort and regulate indoor temperatures. Key players in this market include Air conditioners, smart, and packaged air conditioners. these conditioners are essential in various industries such as commercial, residential, and industrial sectors. The market is driven by factors like increasing urbanization, rising disposable income, and growing awareness about energy efficiency. Technological advancements have led to the development of efficient and energy-saving ac systems, such as those using inverter technology and central air conditioning systems. The market also offers various types of  ac conditioers, including split, portable, and window units. additionally, the market caters to diverse customer needs through various air filters and air purifiers. The future of the market looks promising, with a focus on sustainability and green technologies.

Further, the market offers a diverse range of solutions to cater to the cooling needs of residential and commercial end users. From room air conditioners to ducted AC and ductless AC systems, the market provides energy-efficient solutions to combat rising temperatures. Advanced technologies such as smart air conditioners and variable refrigerant flow (VRF) systems enhance comfort and efficiency, while multi-brand stores and retail shops serve as distribution channels. These systems are widely adopted in commercial offices and retail establishments, replacing manual technology with automated solutions. As demand grows for more sustainable cooling options, the Air Conditioning market continues to evolve to meet the needs of modern consumers and businesses.

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What are the Key Data Covered in this Market Research and Growth Report?

• CAGR of the market report during the forecast period
• Detailed information of market analysis and report on factors that will drive the growth of the market between 2024 and 2028
• Precise estimation of the size of the market and its contribution in focus to the parent market
• Accurate predictions about upcoming trends and changes in consumer behavior
• Growth of the market across APAC, Europe, North America, Middle East and Africa, and South America
• A thorough analysis of the market’s competitive landscape and detailed information about companies
• Comprehensive analysis of factors that will challenge the growth of market companies

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