【DUCT】Global Air Conditioner Market Overview 2016

The recently published BSRIA market intelligence study on the global air conditioning (AC) marketshows that contraction slowed down in 2016 compared to the previous two years. The recent indicators show that growth is expected to resume in 2017 across many regions.

The global AC market contracted by one per cent in value terms in 2016, compared with a drop of five per cent in 2015, was not as bad as was initially expected. The Chinese market saw a late recovery supported by hot weather and the Government’s issue of a new five year plan, which boosted sales. Brazil and Saudi Arabia were the other main contributors to the negative growth.

The global AC market was valued as US$92.6 billion, with packaged products 1 accounting for almost 85 per cent of the value.

The biggest packaged air conditioning 1 market is Asia Pacific accounting for some 60 per cent of the world market by volume. The market declined by one per cent in 2016, a lower figure than previously expected; positive developments in China in the second half of the year saved the market from falling further.

The central plant 2 markets performed poorly with the exception of the Americas. The US, which is the second biggest central plant market, showed moderate growth. The slowdown in investments in industrial new construction and the low growth in healthcare and education restricted further market expansion. At the other end, the demand in the commercial office and hospitality verticals remained strong, leading to some growth.

Continued pressures on the Brazilian economy took their toll in the air conditioning markets as the country experiences its worst recession on record.

Saziye Dickson, Senior Market Research Consultant, BSRIA, Worldwide Market Intelligence, said:

“Overall, 2016 has been a good year in Europe and South East Asia region. The scorching heat and resumed growth – especially in southern Europe – has benefited the air conditioning markets across the region and particularly saw a boost of the Italian market. South East Asia benefits from a hot climate with an immature air conditioning market, which is boosted by economic growth through foreign direct Investments, new construction activities, tourism and public investments resulting in a seven per cent overall growth.

The Americas region contracted by five per cent in volume terms and reached nearly 27 million units in 2016. There was a real mixture of performances within the biggest markets in the region with the US, Canada and Mexico all showing strong growth while the Brazilian, (-46 per cent) and Argentinian markets (-15 per cent) plummeted. Political instability and economic downturn were the main reasons behind these drops.

The overall growth in the US air conditioning market was promising at an increase of eight per cent in 2016. The growth was evident across all product areas bar the large packaged segment. Consumer spending, new construction activities, especially in the office, hospitality and retail markets, as well as low interest rates, were some of the main drivers in 2016.

The European AC market grew by 13 per cent in 2016 after sluggish performance in the last few years. Economic recovery in most European countries combined with the heat wave in southern Europe and replenishment of stocks resulted in a strong growth.

Growth was evident in most of the large air conditioning markets in Europe, apart from the UK. The vote to leave the European Union caused a lot of uncertainty and the British pound fell to its lowest in the last 31 years. Overall there was a lack of demand for office spaces and those projects which were near completion were also pushed back due to uncertainty about tenant demand, impacting on completion dates and consequently the purchase and installation of air conditioning.

The MEIA region recorded a small decline in 2016 after two years of growth. The total air conditioning market was valued at just over 13 million units. The biggest market in the region was India which recorded an eight per cent growth but the Saudi market continued to suffer due to the lack of government investments and contracted by 25 per cent, bringing the whole region down by one per cent. The growth in India was driven by the rapid increase of penetration levels of air conditioning in the residential segment, soaring temperatures in May and a stable Rupee allowing better business planning and foreign direct investments.”


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