The recently published BSRIA market intelligence study on the global air conditioning market shows that global growth “disappointed again” in 2015 – across all product ranges – and is expected to recover at a slower pace than previously projected.
The global market contracted by five per cent in value terms in 2015 whereas the market had shown a growth of seven per cent in 2014. The previous year’s main drivers in the increase in the Asian Pacific region were also key in the drop of the total world market in 2015.
The biggest PAC (packaged air conditioning) market is Asia Pacific accounting 61 per cent of the world market by volume declined by five per cent. The top four biggest markets, China, Japan, Indonesia and South Korea all contracted and contributed to the downward trend.
2015 has been a turbulent year for China. The country’s GDP grew at its lowest rate in 25 years spreading fears across the globe. The stock market has seen huge volatility, declining imports and exports, a depreciation of its currency, raising concerns about non performing debts and low raw material prices all of which had a negative impact in the air conditioning market. The PAC market has reached 49.3 million units down by seven per cent compared to 2014. The mini-VRF (20kW) was the only market that has managed to grow amongst PAC products due to the growing demand from residential applications.
Saziye Dickson, Senior Market Research Consultant, WMI, said: “The bit of good news from the region came from Vietnam, Australia and Philippines. The growing GDP and attractive economic characteristics mean the Vietnamese market has good potential for Foreign Direct Investments. However, the growth in the splits market was mostly down to hot weather during the peak season and after-season. In Australia, demand has grown in 2015 as a result of a strong residential market in both the apartment and housing sectors.
In the Philippines the solid growth of packaged products market is attributable to the flourishing new private construction especially the high rise condominium, commercial offices, shopping malls and other applications.”
The Americas region also mirrored the trend and contracted by two per cent in volume terms at 27.4 million units in 2015. The previous year’s biggest contributor Brazil contracted by 18 per cent after 28 per cent growth in 2014. The political instability and economic downturn were the main reasons behind this drop. The growth in the US market, which is the biggest market in the region minimised the negative impact in the continent. The PAC market grew by four per cent and has reached 16.1 million units. The main reasons for growth were improved macroeconomic indicators such as low unemployment; growth in GDP, increase in construction output.
The European PAC market grew by two per cent in 2015 compared to the previous year’s drop of 16 per cent in volume terms. Most economies in the region started to show small economic recovery with the impact felt across air conditioning industries. In addition to that hot summer and energy efficiency were the main factors in many countries. The new F Gas regulation, which has been updated from 2006 version, came in place from 1 January 2015 putting a lot more pressure in the industry.
The growth in Spain, France, Italy, Turkey, Greece, Sweden and Germany has contributed to the growth in the region, in order of importance. The biggest PAC market, Russia, has recorded a massive drop of 18 per cent by volume. The sharp contraction in the Russian economy, devaluation of its currency, over 50 per cent, economic sanctions and low oil prices all had an impact on many industries including air conditioning.
The MEIA region managed to show another year of growth in 2015 increasing from 11.6 million to 12.5 million units. The biggest AC market in the region India continued to be the major contributor to this growth. The market grew by four per cent in volume terms and reached four million units. There were several contributing factors such as growing GDP, low raw material prices, as India relies on imports of raw materials, and resumption of projects which were on hold pre-election in 2014.
The biggest four major markets all recorded growth in 2015 – namely: India, Saudi Arabia, Nigeria * and Egypt. Iran, Bangladesh and South Africa were all amongst growing markets in the region.
The countries that failed to grow were UAE, Kuwait and Qatar. The drop in oil prices which these three countries heavily relies on, caused reduction in public spending consequently impacting the air conditioning industry.
Total sales of moveables for 2015 are estimated at two million units representing an increase of seven per cent compared to 2014 and valued at US$524 million. The biggest moveables market, the United States grew by 16 per cent and reached one million units. The main reason behind the growth in the US was weather patterns, but also competitive pricing, which is moving downwards as competition toughens.
Saziye added: “The hot summer in Europe caused portables market to raise significantly; Italy, Spain and France all grew by 89 per cent, 49 per cent and 38 per cent respectively by volume.
The world’s other significant markets – Brazil and China – also managed to grow however it was at more modest levels, three per cent and one per cent in volume terms.
Although this market is difficult to forecast due to seasonal sales, BSRIA expects this market to grow at around three per cent CAGR between the period of 2014-2020 in volume terms.”
Windows / through the wall
The windows/ through the wall market took upward trend and grew by two per cent in volume. The market was valued as 12 million units and US$2.6 billion. This growth was mostly down to world’s two biggest markets showing increase; the USA 4 per cent and Saudi Arabia 14 per cent in 2015. The two markets accounted for round 60 per cent of the global market.
The warm weather and “Indian Summer” was the main reason of the increase in the US and reasonable pricing of new energy efficient windows units compared to splits was the main reason behind the increase in Saudi Arabia.
This market is expected to remain relatively flat globally, albeit falling in many countries, the growth in the US is expected to keep the market relatively stable during the forecast period of 2014-2020.
The indoor packaged are normally defined as self-contained units for light commercial applications, which have indoor installation to respond to space constraints. Therefore, this is a relatively niche market.
The world market was just over 100,000 units in 2014 which has increased from 96,000 units in 2014 with a corresponding value of US$426 million. Japan by far the biggest market for this product accounting for around quarter of the total market by volume followed by Italy, Spain, China and USA.
In the long term BSRIA expects this market to decline by around 0.4 per cent CAGR in volume terms between the period of 2014 and 2020.
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* Nigeria – this market was researched in 2014: no update was available in 2015.
This statement is based on the latest BSRIA’s World Air Conditioning Study, published in March 2016, covering 30 countries.