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BSRIA Survey July 2020: HVAC industry stakeholders define market changes and trends post COVID-19 pandemicJuly 2020

BSRIA Worldwide Market Intelligence published the latest of its annual studies on the HVAC and Smart markets at the end of March. At the time of the publication the extent of the pandemic was far from clear and even less so the impact it would have on the markets.

As markets revive, they face challenges resulting from the COVID-19 societal and economic impact. BSRIA is undertaking regular surveys with key industry stakeholders to keep its clients and members informed on the changes.

  • We will undertake the survey in July, September and December 2020 and present the overall summary of results in our monthly newsletter.
  • We will publish an update of key markets’ 2020 data and short-term forecast for AC, BACS, Boilers, Cabling and Heat Pumps in September based on the latest research that will complement the survey.

Our July survey was completed by 68 companies and we have aggregated the responses to present some interesting key findings.

We would like to take the opportunity to thank all companies who participated in our survey.

Participants were presented with questions and a choice of answers to rate from 1 to 5, with 1 being the easiest and 5 the most difficult to tackle. They also had opportunity to add free responses, rather than just selecting pre-defined answers. Participants to our survey are all stakeholders of the HVAC and Controls manufacturing market, located around the world.

It is interesting to note that although the timing of the pandemic has been slightly different in different world regions, and governments’ responses to the crisis have varied among countries, companies across the globe share the same concerns in terms of implications that the pandemic has triggered.

Similarly, the assessment of the impact the pandemic will have on the markets’ sales performance, although slightly different in different world regions, stays within a similar range.

1. COVID 19 impact on sales performance of HVAC products and Buildings Controls

Participants were asked to assess the impact on sales of HVAC products and Buildings Controls in 2020 and 2021. Respondents did not expect the sales impact to exceed 10% in 2020. They were however nearly unanimous in foreseeing two years of negative growth, with 2021 posting a sales decline between 1% and 2%.

The general aggregated view was that Europe will suffer the most in 2020, with markets down by close to 10% in comparison to 2019 sales levels. 2021 is expected to bring negative growth too, with sales some 1 to 2% lower than the year before.

China is expecting a sales decline just below 9% in 2020 and offers a more pessimistic view on market performance in 2021, with sales expected to be lower by over 2% in comparison to the year before.

North America is expected to see a fall in sales of around 7.5% in 2020 and the second year of negative growth in 2021, with sales falling again by some 1%.

Other regions were less affected in the first half of the year according to responses. We will be monitoring the trend there in the second half of the year.

The wave of COVID-19 experienced between January and June has clearly caused damage that goes deeper than just an inability to operate and sell during lockdowns. Adjustments on manufacturing, distribution and consumer side are likely to take some time, impacting sales negatively for two years in a row.

2. Pandemic related changes and trends observed in the last few months 

Questioned about changes and trends that have been observed in recent months, companies provided insight in the way markets have started to evolve.

Responses have brought forward a variety of changes that are happening right across the markets:

  • Increased interest in filtration and indoor air quality (IAQ). 
  • Focus on data centres.
  • Shift towards residential products.
  • Uptake of E-commerce and click & collect sales models.
  • Remote activity on the rise: remote working, remote monitoring, remote training.
  • Efforts to enhance existing technology to adopt new ways of communicating.
  • Step back and review attitude, with consultants busy but contractors quiet.
  • Shift of interest towards replacement rather than new build market.
  • Customers building stock in case there is a second wave of the pandemic.
  • Projects on hold/lack of orders/uncertainty about the future.

Health security measures are supporting rising demand for ventilation and air quality related products. Slowdown in the delivery of new construction projects is prompting companies to shift their interest towards existing buildings where replacements – as well as climate change-driven refurbishments – offer opportunities.

Wider technology adoption is a global trend possibly leading to better efficiencies and more direct relationships across the value chain. IoT is accelerating worldwide. 

Uncertainty remains in relation to the longevity of the pandemic and thus related delays in project progress.

3. Challenges the industry will face going forward

As countries emerge from lockdown the cost of the measures undertaken to contain the pandemic are calculated with clear indications pointing towards an imminent global recession.

Concerns about economic recovery and lagging consumer demand are at the forefront of all the responses.  As governments gradually withdraw their financial support, the upcoming recession and rising unemployment will delay recovery by dampening commercial investment and consumer spending.

Travel restrictions fare quite high on the list of troubles, matching relatively high uncertainty around finding new ways of liaising with clients. It seems that altering traditional ways of trading and collaborating poses some difficulties even though technology adoption is not causing many problems.

% of respondents who gave each answer the highest scores*

*Other challenges mentioned: Acceleration of IoT, postponing of projects, bad debts, increasing material costs which are difficult to pass on, significant hit on retail and restaurants which will impact sales of AC, reduced demand for office space, Brexit.

4. How do organisations respond to the challenges?

Companies’ initial responses were focused on establishing new working models with both internal staff and external partners. It goes hand-in-hand with efforts to achieve advantages that the adoption of modern communication technology can offer. Online marketing tools, virtual training, and enhanced connectivity all support new ways of collaborating and provide opportunities for the development of new services.

It is noteworthy that efforts to engage more closely with distributors and installers by offering technical training appear to be a strong trend, having scored the highest in the table below.

% of respondents who gave each answer the highest scores*

*Other responses mentioned: Reduction in travel in the next 12-18 months

The above insights have shaped some topics that are likely to see further developments in the coming months. BSRIA will continue to monitor the changes and assess which ones are likely to turn into solid trends that will shape the future of the markets. Our next survey will run in September.

To find out more about BSRIA’s 6-month updates of the key AC, Cabling, BACS, Boilers and HPs markets which comes out in September, contact us at:

• America sales enquiries: BSRIA USA: sales@bsria.com ¦ +1 312 753 6803, www.bsria.com/us/

• China sales enquiries: BSRIA China: bsria@bsria.com.cn ¦ +86 10 6465 7707, www.bsria.com.cn

• All other sales enquiries: BSRIA UK: wmi@bsria.co.uk ¦ +44 (0) 1344 465 540, www.bsria.com/uk/