Air Conditioning Systems Market

Global Air Conditioning Systems Market Size (2024 to 2032)

The size of the global air conditioning systems market was worth USD 191.9 billion in 2023. The global market is anticipated to grow at a CAGR of 5.15% from 2024 to 2032 and be worth USD 301.55 billion by 2032 from USD 201.78 billion in 2024.

Current Scenario of the Global Air Conditioning Systems Market

Air conditioners are used to remove the heat and humidity inside a room or vehicle and provide cold air that is in an enclosed space. Also, these systems provide heat under cold weather conditions. Air conditioners are becoming more and more popular in today’s world due to drastically changing climatic conditions. According to the International Energy Agency (IEA), the demand to supply huge amounts of energy will be increasing only due to the rising number of air conditioners in recent years. It is expected that there will be at least a three-fold increase in the demand for energy only due to air conditioners. By 2030, 45% of air conditioners will be installed across the world, which is 25% of AC installations in 2023. Therefore, the air conditioning systems market is likely to have a potential growth rate in the coming years.

MARKET DRIVERS

The increasing global temperatures are resulting in the rapid adoption of air conditioning systems and propelling the global market growth.

As the regions are characterized by hot climates, the demand for cooling solutions also rises. The urgency to combat heat-related challenges has propelled the market forward as individuals and businesses seek effective means to ensure comfort and productivity. As urbanization persists, creating urban heat islands, and with a burgeoning world population, the need for efficient and sustainable air conditioning solutions becomes paramount. Manufacturers are responding with technologically advanced, energy-efficient systems. Additionally, government initiatives promoting eco-friendly HVAC technologies further drive the market. This confluence of factors positions the Air Conditioning Systems Market as a critical player in addressing the escalating demand for cooling solutions amid the warming global climate.

Technological advancements have had a transformative impact on the air conditioning systems market.

The surge in demand is attributed to the development of energy-efficient systems, fostering sustainability. Smart and connected devices are reshaping the industry, providing consumers and businesses with unprecedented control and automation. Emphasis on environmental consciousness has led to the adoption of eco-friendly refrigerants, aligning with global efforts to reduce ecological impact. This confluence of innovation addresses the rising expectations for improved performance and energy conservation. As consumers seek enhanced comfort without compromising environmental responsibility, the market witnesses a paradigm shift towards cutting-edge solutions. The integration of these technologies not only meets current demands for efficiency and connectivity but also positions the air conditioning sector at the forefront of sustainable and intelligent climate control solutions.

MARKET RESTRAINTS

Environmental concerns are a significant restraint in the Air Conditioning Systems Market as certain refrigerants contribute to ozone depletion and greenhouse gas emissions.

Stringent regulations targeting the phase-out of harmful refrigerants, driven by global environmental commitments, present a significant challenge for manufacturers. Compliance demands costly system upgrades and transitions to environmentally friendly alternatives, impacting the industry's cost dynamics. Sustainable solutions intensify as eco-conscious consumers and stringent regulatory frameworks prioritize the reduction of environmental impact. Manufacturers are trying to innovate ideas, invest in research, and adapt swiftly to these changing regulations, underscoring a critical need for environmentally responsible practices. 

High initial costs are a significant restraint in the Air Conditioning Systems Market. Particularly in cost-sensitive markets, the upfront expenses associated with the purchase and installation of air conditioning systems, especially those integrating advanced technologies, deter potential buyers. The substantial initial investment necessitates careful consideration of long-term benefits, impacting consumer decisions and adoption rates. Manufacturers and stakeholders grapple with the challenge of making innovative and energy-efficient systems economically viable to enhance market accessibility. 

MARKET OPPORTUNITIES

The integration of modern technology with air conditioner systems is esteemed to overcome all the challenges encountered with traditional systems.

The future of air conditioner systems is going beyond expectations with modern technologies. The launch of environmentally friendly refrigerants is ascribed to leveraging the growth rate of the air conditioning systems market. Traditional air conditioning systems have a negative impact on the environment due to the release of hydrofluorocarbons. Modern technological development in air conditioning has overcome these challenges and launched new systems that release less hydrofluorocarbon, which is getting a green signal from higher government officials. The rapid adoption of advanced technologies and surging demand for modern infrastructure are straightly inclined to prompt the growth rate of the air conditioning systems market. The future of air conditioning systems is all about the integration of smart technologies that are leveling up the growth rate of the air conditioning systems market.

MARKET CHALLENGES

Air conditioning systems require high energy consumption, which is a big challenge for the market's key players.

Several R&D activities are going on to launch highly efficient air conditioning that consumes less energy and is compatible in size. Top companies are vigorously investing huge amounts in R&D activities, which is attributed to overcoming the challenges soon. Stringent rules and regulations by the government to combat the release of greenhouse emissions globally are likely to hinder the market’s growth rate during the forecast period. Air conditioning systems only majorly account for releasing 4% of greenhouse gases across the world, which is a serious issue when launching innovative technologies to protect the environment.

REPORT COVERAGE

SEGMENTAL ANALYSIS

Global Air Conditioning Systems Market Analysis By Product Type

The split and multi-split systems segment had the major share of the global market in 2023, and the domination of the segment is expected to continue throughout the forecast period. Split and multi-split systems are dominating the market as they offer flexibility by allowing individualized climate control for different zones or rooms, making them popular for both residential and commercial use. The ability to cool specific areas rather than an entire building increases energy efficiency, a crucial factor in today's market. Additionally, the relatively lower installation costs compared to centralized systems contribute to their widespread adoption.

The variable refrigerant flow segment is expected to register a prominent CAGR during the forecast period in the global air conditioning systems market. Variable Refrigerant Flow (VRF) Systems have gained second popularity in the market due to their ability to provide heating and cooling simultaneously in different zones. The energy efficiency and precise control make them suitable for various applications.

The window segment had a considerable share of the worldwide market in 2023 and is expected to grow at a notable CAGR during the forecast period. Window Units are also popular in residential applications and hold the third-largest share of the market. They are known for their simplicity and cost-effectiveness, but split systems often offer more features and flexibility.

The packaged air conditioners segment is estimated to grow at a steady CAGR during the forecast period. Packaged air conditioners are commonly used in commercial and industrial settings. Packaged air conditioners are centralized systems that can handle larger spaces. Their market share is notable in specific sectors where centralized cooling is preferred.

Global Air Conditioning Systems Market Analysis By Distribution Channel

The multi-bard stores segment led the market in 2023 and is projected to grow at the fastest CAGR in the global market during the forecast period. Multi-brand stores are dominating the market as they carry products from various manufacturers and have traditionally been a significant distribution channel. These stores provide consumers with a range of options, allowing them to compare different brands and models in one location. They are particularly prevalent in regions where consumers value choice and prefer to physically inspect products before making a purchase.

The exclusive stores segment is predicted to witness a noteworthy CAGR during the forecast period. Exclusive stores have gained prominence in direct and focused brand experience. These stores often emphasize brand loyalty, showcasing the full range of products and providing expert advice. 

The online distribution channel has seen the third substantial growth, driven by the increasing trend of e-commerce. Consumers appreciate the convenience of browsing and purchasing air conditioning systems online. This channel allows for easy price comparison, reviews, and doorstep delivery. 

Global Air Conditioning Systems Market Analysis By End-User

The commercial segment is anticipated to be leading the global market during the forecast period. The commercial sector is most dominating in the air conditioning system market as it often requires larger and more centralized systems, such as packaged air conditioners or variable refrigerant flow (VRF) systems, capable of efficiently cooling expansive spaces. The commercial segment is also influenced by factors like economic activity, construction projects, and the need for precise temperature, which is increasing market growth.

The residential segment is also a large segment and is expected to account for a substantial share of the worldwide market during the forecast period. The residential sector has been the second dominant end-user segment for air conditioning systems due to its home cooling solutions, which are driven by factors such as rising global temperatures, increased disposable income, and the desire for enhanced comfort. The demand for residential air conditioning systems is influenced by housing construction, home renovation trends, and climate conditions in different regions.

REGIONAL ANALYSIS

Asia Pacific air conditioning systems market size is anticipated to grow at a CAGR of 7.9% during the forecast period.

India and China are the major countries that are attributed to showcasing major growth factors for the air conditioning systems market. China holds the number one position in manufacturing air conditioners, where 70% of ACs across the world are manufactured in China. According to the International Energy Agency, China will be the world’s topmost country in installing a high number of ACs in 2023. Over the past decade, the demand for air conditioning systems has been in the first position due to the huge population. In 2023, China’s stock of air conditioners was 862 million from 531 million in 2015. India is setting up to rank first in installing a number of air conditioners in the next coming years, which is expected to surpass China’s stock due to extreme heat waves encountered in many parts of the country.  

North America, next to Asia Pacific, is leading the largest share of the air conditioning systems market. More than 90% of the homes in the US use air conditioners, according to a survey report by the Federal Government. The soaring temperatures in most parts of the country are likely to elevate the demand for air conditioners. Government investments in adopting new technologies in manufacturing air conditioning systems to reduce the concern over the emissions of greenhouse gases are attributed to outraging the growth rate of the US market. Growing living standards and increasing disposable income in developed countries like the US and Canada are major factors that will help the market grow during the forecast period.  

Europe's air conditioning systems market size is likely to hit the highest CAGR by the end of 2032. The launch of innovative air conditioning systems that help in achieving net zero targets is likely to expand the growth rate of the market. European Union is strictly posing the instructions to potentially reduce carbon emissions, where the demand for the renovation and replacement of old buildings is strongly going, and that is to show huge growth opportunities for the air conditioning systems market during the forecast period.

KEY PLAYERS IN THE GLOBAL AIR CONDITIONING SYSTEMS MARKET

Companies playing a prominent role in the global air conditioning systems market include Daikin Industries, Carrier Global Corporation, Johnson Controls International, Mitsubishi Electric Corporation, LG Electronics Inc., Samsung Electronics Co., Ltd., Hitachi, Ltd., Fujitsu General Ltd., Trane Technologies plc, Lennox International Inc., Panasonic Corporation, Midea Group Co., Ltd., Haier Smart Home Co., Ltd., GREE Electric Appliances Inc., Dover Corporation (Unified Brands), Rheem Manufacturing Company, Emerson Electric Co., Nortek Global HVAC LLC, Bosch Thermotechnology Corporation

RECENT HAPPENINGS IN THE GLOBAL AIR CONDITIONING SYSTEMS MARKET

• In 2023, Daikin focused on energy-efficient solutions. They might have introduced new products or technologies aimed at improving energy efficiency and sustainability in air conditioning systems.
• In 2023, Carrier introduced advancements in smart HVAC systems, integrating IoT for improved efficiency and control.
• In 2023, LG has been active in the air conditioning market, and their developments include advancements in air purification technologies, energy efficiency, and smart connectivity features in their systems.

DETAILED SEGMENTATION OF THE GLOBAL AIR CONDITIONING SYSTEMS MARKET INCLUDED IN THIS REPORT

This global air conditioning systems market research report has been segmented and sub-segmented into the following categories.

By Product Type

• Window
• Split And Multi-Split
• Packaged Air Conditioner
• Variable Refrigerant Flow
• Others

By Distribution Channel

• Multi-Brand Stores
• Exclusive Stores
• Online
• Others

By End-user

• Residential
• Commercial

By Region

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East and Africa