[Research Report] The HVAC system market size is expected to grow from US$ 246.10 billion in 2022 to US$ 597.7 billion by 2030; it is estimated to record a CAGR of 11.3% from 2022 to 2030.

Analyst Perspective:

Asia Pacific has surfaced as a key regional HVAC system market. Countries such as China, India, Japan, and Australia are the major contributors to this regional market. Increasing industrial and infrastructural operations in Asia Pacific, especially in China and India, led to an increase in construction projects, propelling the demand for HVAC systems. Due to the increasing investment in infrastructure in China and significant consumer spending on home repairs and renovations, the construction business is thriving, thus bolstering the HVAC system market in the country.

The demand for HVAC products in Europe and the US is gaining momentum due to advancements in smart infrastructure and the rising number of smart homes. Moreover, the rising construction sector across the Middle Eastern countries, such as the UAE, Saudi Arabia, and Qatar, is also projected to play a vital role in the global HVAC system market growth over the next few years.

The UK, France, Italy, Russia, Spain, and Germany are a few of the worst-affected European countries by the COVID-19 outbreak. Businesses in the construction sector faced severe economic difficulties as they had to suspend their operations or substantially reduce their activities. However, construction activities have resumed now due to the ease of lockdown restrictions and successful vaccination drives. This is expected to propel the HVAC system market in Europe during the forecast period.

Market Overview:

The HVAC system market is highly fragmented and demonstrates strong competition among the HVAC system market players. The surge in demand for eco-friendly HVAC systems and smart homes has encouraged participants to undertake innovative developments in HVAC technologies, focusing on enhancing energy efficiency. Significant corporations engage in partnerships, acquisitions, product innovation, and development strategies.

Additionally, in 2023, the HVAC industry is shifting toward smart connected systems. With smart connected systems, homeowners and building managers can control their HVAC systems remotely using mobile devices and smartphones. These systems feature precise temperature control and can adjust automatically to changing weather conditions to improve energy efficiency. Moreover, the rise of heat pumps is changing the HVAC system market outlook, as there is a need to phase down HFC refrigerants. Other agents of change include greater connectivity among systems.

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HVAC System Market: Strategic Insights

Market Size Value in	US$ 246.10 billion in 2022
Market Size Value by	US$ 597.7 billion by 2030
Growth rate	CAGR of 11.3% from 2022 to 2030
Forecast Period	2022-2030
Base Year	2022

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Market Driver:

Emerging Technologies Promote Demand for Smart HVAC Systems

There is a growing penetration of IoT-enabled devices across residential, commercial, and industrial sectors. HVAC manufacturers are manufacturing smart HVAC systems utilizing wireless technology to communicate with nearby smart devices and adjust the indoor environment automatically. A smart HVAC system can understand the temperature or humidity of different rooms and adjust the climate accordingly. It can also customize the climate based on individual members’ preferences present on the floor. Additionally, these systems can save energy in commercial settings while providing a quieter environment. Such systems can be improvised for predictive maintenance by harnessing the power of artificial intelligence (AI) and machine learning (ML), thus offering better cost savings and longer operational life. The adoption of smart HVAC systems has been rising across residential, commercial, and industrial sectors due to the integration of such advanced technologies. HVAC manufacturers have been collaborating with different ecosystem companies to improve their product offerings. In June 2020, Schneider Electric SE, Somfy Group, and Danfoss A/S partnered with Assa Abloy AB to develop and deploy seamless smart solutions for commercial and residential applications. Danfoss A/S is one of the largest manufacturers of HVAC systems in Europe, and the company’s participation in such collaboration can strongly aid in HVAC product development. Thus, collaborations can offer customers with cutting-edge connected solutions such as smart HVAC systems, which, in turn, is expected to positively impact the growth of HVAC system market.

Segmental Analysis:

The central ACs segment held the largest HVAC system market share in 2022. The term “central air conditioning” or “central A/C” refers to a system in which air is cooled centrally and then delivered to and from various rooms using several fans and ducting. An air conditioner's compressor does the bulk of the work that allows for air conditioning. Cool air is produced by forcing heat out of the building using refrigerant gas, which is compressed. Central air conditioning removes air from different rooms in the premises where it is installed; air is sucked through the air filter, which filters airborne particles such as dust and lint. Central air conditioning units provide quieter operation and cleaner air. According to a report by Yale School of Environment 2020, the demand for air conditioning solutions will grow by 59% by 2050 due to climate changes, and demand for air conditioning in commercial buildings where central ACs are used is expected to increase by 17%. According to the International Energy Agency, central AC units are expected to grow to 5.6 billion units by 2050 worldwide. The rising global temperature will generate the need for central ACs. Some of the prominent players providing central ACs are Lennox International, Carrier, and Daikin.

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Regional Analysis:

The HVAC system market is segmented into five major regions—North America, Europe, Asia Pacific (APAC), the Middle East & Africa (MEA), and South America. In 2023, North America led the HVAC system market with a substantial revenue share, followed by Asia Pacific. Further, Asia Pacific is expected to register the highest CAGR in the HVAC system market from 2023 to 2030.

The growth in the construction industry in developed countries—such as the US and the UK—and emerging economies—including China and India—is fueling the demand for HVAC systems. These countries have also witnessed a rise in activities in the industrial sector, comprising manufacturing and other institutional and industrial facilities, which has been driving the need for HVAC systems. Further, favorable initiatives taken by companies for improving HVAC have increased the uptake of eco-friendly HVAC systems worldwide. In 2022, Chromasun, an Australian manufacturer of advanced high-temperature solar panels, announced that it was developing chillers that utilize gas and solar panels to function efficiently.

Key Player Analysis:

Daikin Industries, Ltd.; Emerson Electric Co.; Honeywell International Inc.; Johnson Controls Inc.; LG Electronics; Carrier Global Corporation; Lennox International Inc.; Trane; EVAPCO, Inc.; and Rheem Manufacturing Company are among the key players operating in the HVAC system market.

Recent Developments: 

Inorganic and organic strategies such as mergers and acquisitions are highly adopted by companies in the global HVAC system market. A few recent developments by key HVAC system market players are listed below: 

• In 2022, DAIKIN announced the expansion of its new heat pump heating factory in Poland. The company announced an investment of around US$ 300 million toward the factory. The new production base will start operations in July 2024 to meet the rapidly increasing demand for heat pumps in Europe.
• In 2021, Honeywell announced its collaboration with DunAn Environment for the HVAC industry transition to Solstice® N41 (R-466A) by developing their product line of HVAC components as compatible.
• In 2022, Rheem Manufacturing company announced the acquisition of DEJONG from Nordian Capital. The acquisition will accelerate growth and expansion for European manufacturers and expand product offerings for the Rheem manufacturing company.
• In 2022, Daikin announced the completion of the acquisition of Duplomatic MS S.p.A. The share purchase agreement included a price of US$ 220 million. The acquisition is scheduled to be completed in July 2022.