HVAC System Market by Cooling Equipment (Unitary Air Conditioners, VRF Systems), Heating Equipment (Heat Pumps, Furnaces), Ventilation Equipment (AHUs, Air Filters), Implementation Type, Application and Region - Global Forecast to 2028
[297 Pages Report] The global HVAC system market in terms of revenue was estimated to be worth USD 206.3 billion in 2023 and is poised to reach USD 280.1 billion by 2028, growing at a CAGR of 6.3% from 2023 to 2028. The new research study consists of an industry trend analysis of the market.
The rising need for energy-efficient and sustainable buildings is expected to propel the growth of the HVAC system industry during the forecast period. Residential, commercial, and industrial buildings use heating, cooling, or climate control technologies to obtain thermal comfort and satisfactory indoor air quality. Variations in climatic changes have led to the growing demand for cooling and heating systems. Long-term climate change is the major reason for the increased energy consumption to meet the cooling demand from buildings, which increases the load on air conditioners. The energy consumed by this equipment varies according to the ambient temperature and humidity conditions.
HVAC System Market Forecast to 2028
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HVAC System Market Dynamics
Driver: Rising constructions activities in residential and industrial sectors
The construction sector is a major driving force behind the growth of the HVAC industry. The demand for HVAC systems has been increasing in both residential and industrial sectors, driven primarily by the surge in construction activities. The global construction industry has witnessed significant growth in recent years due to rapid urbanization, population growth, and industrialization.
In the residential sector, the increasing demand for housing units has led to the construction of new homes and apartments, thereby driving the demand for HVAC systems. As people spend most of their time indoors, it has become essential to maintain indoor air quality, which can be achieved by installing HVAC systems. HVAC systems also provide heating and cooling solutions that enhance the comfort levels of the occupants. Moreover, HVAC systems are designed to be energy efficient, which can help residents save money on their energy bills. Newer systems are often equipped with features like programmable thermostats and energy-efficient components that can help reduce energy consumption.
Restraint: High maintenance, repair, and installation costs for HVAC systems
According to consumer groups and HVAC industry consultants, 90% of air conditioners and furnaces are improperly sized and installed. The study also states that airflow is key in comfortable indoor environments. Very rarely does a builder put in enough return air vents to support the system they install, especially with new construction. The high cost of maintenance is also a major restraint for HVAC systems. Regular maintenance is essential to keep the system operating efficiently and prevent breakdowns, but this requires trained professionals and specialized equipment. Neglecting maintenance can lead to system failures, which can be costly to repair or replace. The cost of replacement parts also contributes to the high maintenance costs for HVAC systems. Replacement parts for HVAC systems can be expensive, making repairs costly. Furthermore, the availability of replacement parts can be an issue, particularly for the older HVAC system.
Opportunity: Rapid transformation of IoT within HVAC industry
The Internet of Things (IoT) has been transforming various industries over the past few years, and the HVAC industry is no exception. In the HVAC industry, IoT technology has enabled the development of smart HVAC systems that can be remotely controlled, monitored, and managed through a centralized system. The rapid transformation of IoT within the HVAC industry presents several opportunities for growth and development. Firstly, IoT-enabled HVAC systems provide real-time data on energy consumption, temperature, humidity, and other environmental factors, enabling more accurate and efficient HVAC system control. This data can be used to optimize HVAC system performance and reduce energy consumption, leading to cost savings for building owners and operators.
Challenge: Lack of awareness about benefits of HVAC systems in developing countries
One of the main reasons for the lack of awareness is the limited availability of information and education about HVAC systems in many developing countries. This is due to governments and private organizations' inefficient investment in HVAC infrastructure and training programs. As a result, many people in these countries do not have access to the knowledge and resources needed to make informed decisions about HVAC systems. Another challenge is the affordability of HVAC systems in developing countries. Many people in these countries cannot afford the high initial cost of purchasing and installing HVAC systems, which can be a major barrier to adoption. In addition, the lack of government incentives or financing options for energy-efficient HVAC systems further exacerbates this challenge.
HVAC System Market Ecosystem
The HVAC (heating, ventilation, and air conditioning) system market is dominated by established and financially sound manufacturers with extensive experience in the industry. These companies have diversified product portfolios, cutting-edge technologies, and strong global sales and marketing networks. Leading players in the market include DAIKIN INDUSTRIES, Ltd. from Japan, Johnson Controls from the US, Carrier from the US, Trane Technologies plc from the US, and LG Electronics from South Korea.
HVAC System Market Segment Overview
Based on cooling equipment, the HVAC system market for VRF system to hold highest CAGR during the forecast period
VRF systems can be integrated with smart building technologies for greater control and efficiency. Companies are investing in VRF systems to take advantage of these technologies and improve the overall performance of their buildings.
For instance, in April 2022, ABB (Switzerland) and Samsung Electronics (South Korea) joined hands to drive holistic smart building technology, thus providing jointly developed technologies for energy savings and management for residential and commercial buildings. Smart homes leverage a centralized system that integrates various devices and appliances to increase efficiency, save time, money, and energy. For instance, the Samsung SmartThings application and ABB home automation solutions can be interconnected, enabling homeowners to oversee a comprehensive range of systems, such as white goods, gas and smoke sensors, security, energy, and comfort systems, all from one platform. This allows residents to control and monitor their home using their personal devices.
Based on heating equipment, heat pump market to hold the highest market share from 2023 to 2028
A heat pump is a cost-effective solution with a limited budget for homes and government institutions like schools, colleges, and offices; unlike the traditional method of directly generating heat like a furnace or electric boilers, heat pumps transfer heat between outside and indoors. The system does not require any fossil fuels to burn at all. It can provide heating or cooling by using just electricity. As a result, heat pumps require much less electricity than electric boilers and can often achieve a 300–400% efficiency rate. Heat pumps can also work in reverse to extract heat from inside a building and transfer it outside, providing cooling during the warmer months. This is a more energy-efficient cooling method compared to traditional air conditioning systems.
Air filters of ventilation HVAC system to hold the second largest market share from 2023 to 2028
Air filters are devices designed to remove solid particulates and molecular contaminants to improve air quality. They are usually made of a rolled fiberglass material or from pleated paper or cloth enclosed in a cardboard frame. The basic function of an air filter is to clean the air circulated through the heating and cooling system. One example of a company investing in air filters is Google. In 2021, Google announced it had installed air purification systems with HEPA filters in all its offices and data centers worldwide. The company stated that the air filters could remove up to 99.97% of fine particles, including those that can carry viruses and bacteria. This move was part of Google's efforts to create a healthier work environment for its employees and reduce the spread of COVID-19. Other companies such as Microsoft, Amazon, and Apple have also invested in air filtration systems to improve indoor air quality and protect health of employees.
New construction implementation type to grow at the highest CAGR during the forecast period.
Along with the need for infrastructural development, governments worldwide have also realized the need to curb the adverse effects of construction activities on the environment. Regulatory bodies of various governments have adopted the implementation of green buildings intending to reduce carbon emissions. One of the most widely used industry standards is the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 90.1, which outlines the minimum energy efficiency requirements for commercial buildings in the US. It covers HVAC systems, lighting, building envelope, and other energy usage aspects. These factors influence the adoption of HVAC controls as these ensure energy efficiency and develop a smarter and healthier environment.
Residential application to hold second highest market share in 2023.
HVAC systems provide thermal comfort to occupants of a building or room accompanied by indoor air quality. HVAC systems for residential purposes maintain a consistent temperature, offer varying humidity levels, and improve air quality. These systems can be classified into local or central systems according to zones, locations, and air distribution. Moreover, growing urbanization has resulted in an increase in the adoption of HVAC systems for residential purposes. A US Department of Energy study found that homeowners who installed energy-efficient heating and cooling systems could save up to 30% on their energy bills. For instance, the ENERGY STAR program is a joint program of the US Environmental Protection Agency (EPA) and the US Department of Energy (DOE) that sets energy efficiency guidelines and standards for HVAC products. HVAC products that meet these guidelines and standards are certified as ENERGY STAR compliant.
HVAC system market in Asia Pacific to hold the highest CAGR during the forecast period
China, India, and Japan are among the primary contributors to the HVAC (heating, ventilation, and air conditioning) system market in the Asia Pacific region. The market is experiencing substantial growth, primarily due to increasing construction activities and a rising population. The demand for smart homes is significantly high in countries like China, South Korea, and Japan. Urbanization and industrialization are driving the demand for HVAC systems in the region. Additionally, regulatory programs like the Commercial Building Disclosure (CBD) Program in Australia, Energy Conservation Building Codes in India, the LEED-India project, and the Indian Society of Heating, Refrigerating, and Air-Conditioning Engineers (ISHRAE) are promoting the adoption of HVAC systems in the region.
HVAC System Market by Region
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Top HVAC System Companies - Key Market Players
The dominating HVAC system companies are DAIKIN INDUSTRIES, Ltd. (Japan), Johnson Controls (US), Carrier (US), Trane Technologies plc (US), LG Electronics (South Korea), and others.
HVAC System Market Report Scope
Segment |
Subsegment |
Estimated Value | USD 206.3 billion in 2023 |
Projected Value | USD 280.1 billion by 2028 |
Growth Rate | CAGR of 6.3% |
Market size available for years |
2019-2028 |
Base year considered |
2022 |
Forecast period |
2023-2028 |
Forecast units |
Value (USD Billion) |
Segments covered |
By Cooling Equipment, Heating Equipment, Ventilation Equipment, Implementation Type, and Application |
Geographies covered |
North America, Europe, Asia Pacific, and RoW |
Companies covered |
The major HVAC system market players include DAIKIN INDUSTRIES, Ltd. (Japan), Johnson Controls (US), Carrier (US), Trane Technologies plc (US), LG Electronics (South Korea), Emerson Electric Co. (US), Honeywell International Inc. (US), Mitsubishi Electric Corporation (Japan), Nortek Air Management (US), and Samsung (South Korea). (Total 25 players are profiled) |
HVAC System Market Highlights
The study categorizes the HVAC system market based on the following segments:
Segment |
Subsegment |
HVAC system market, by cooling equipment |
|
Market, by heating equipment |
|
HVAC System Market , by ventilation equipment |
|
Market, by implementation type |
|
HVAC System Market, by application |
|
Market, By region |
|
Recent Developments in HVAC System Market
- In February 2023, Daikin Europe N.V., a subsidiary of Daikin., signed an MoU for a collaborative partnership with the Greater Manchester Combined Authority (GMCA), consisting of 10 wards and cities in the northwest region of England. The MoU calls for cooperation and collaboration between the two parties over five years until 2027 and aims for the large-scale introduction of heat pump heating, education, and skill development to training HVAC technicians.
- In February 2023, Carrier announced the availability of the lower global warming potential (GWP) 515B refrigerant in its AquaEdge 19MV oil-free water-cooled chiller. The AquaEdge 19MV performs in severe, extreme, and unexpected operational and weather conditions.
- In January 2023, Williams Distributing, Co. (Williams), a distribution powerhouse for heating, ventilation, and air conditioning (HVAC) equipment and residential building products in the Great Lakes region, has been acquired by Daikin Comfort Technologies North America, Inc. (Daikin). With Williams’ territory covering a significant portion of the Midwest, this strategic acquisition supports Daikin’s vision to expand the use of inverter heat pump technology in cold climates.
- In January 2023, Johnson Controls announced that it acquired Hybrid Energy AS, a provider of high-temperature energy management solutions focusing on heat pumps for district heating and industrial processes. The unique technology of Hybrid Energy would provide new, cost-effective solutions to customers while addressing decarbonization and sustainability efforts in Europe and beyond.
- In December 2022, LG Electronics Indonesia (LG) launched a series of indoor air treatment products at the LG Air Solution Convention 2022 (Germany). From the health aspect, the innovation has a pre-filter ready to trap large dust particles that can be easily removed for self-cleaning. On the other hand, the auto cleaning feature dries the moisture in the air conditioning, preventing mold growth and other harmful particles that the AC could blow out.
- In November 2022, Trane Technologies announced updates to its trusted Precedent, Odyssey, and foundation lines of HVAC systems. To help customers with buildings of all sizes embrace electrification and decarbonization. The company also released version five of its essential system design software, TRACE 3D Plus, with new capabilities engineers could use to design and validate projects confidently and clearly.
Frequently Asked Questions (FAQ):
What are the major driving factors and opportunities in the HVAC system market?
Some of the major driving factors for the growth of this market include Increasing demand for energy-efficient HVAC systems, rising constructions activities in residential and industrial sectors, government regulatory policies and incentives to ensure energy saving and conservation of natural resources, growing demand for indoor and outdoor air quality, and technological advancements in HVAC systems. Moreover, the rapid transformation of IoT within HVAC industry, and high penetration of VRF systems in residential and commercial applications are some of the key opportunities for the HVAC system market.
Which region is expected to hold the highest market share?
The market in Asia Pacific will dominate the market share in 2023, showcasing strong demand from HVAC system in the region. Increasing construction activities, rising population, per capita income, growing need for energy-efficient devices, and favorable energy efficiency incentives by the government are key factors driving the growth of the HVAC system market in the region. For example, the Singapore government offers a tax incentive of up to 100% of the capital expenditure incurred in the purchase and installation of qualifying energy-efficient equipment, including HVAC systems. Also, the Japanese government provides subsidies of up to 35% of the cost of installation of energy-efficient HVAC equipment in commercial buildings.
Who are the leading players in the global HVAC system market?
Companies such as DAIKIN INDUSTRIES, Ltd. (Japan), Johnson Controls (US), Carrier (US), Trane Technologies plc (US), LG Electronics (South Korea), Emerson Electric Co. (US), Honeywell International Inc. (US), Mitsubishi Electric Corporation (Japan), and Nortek Air Management (US) are the leading players in the market. Moreover, these companies rely on strategies that include new product launches and developments, partnerships and collaborations, and acquisitions. Such advantages give these companies an edge over other companies in the market.
What are some of the technological advancements in the market?
In recent years, there has been a significant increase in the use of software in the HVAC industry. Software is being used to improve the efficiency of HVAC systems, reduce energy consumption, and enhance building automation systems. One important application of software in HVAC is the use of building management systems (BMS). BMS software allows facility managers to monitor and control all building systems from a single interface, including HVAC, lighting, and security. This allows for better coordination and optimization of building systems, resulting in significant energy savings and reduced maintenance costs.
What is the impact of global recession on the market?
The demand for HVAC systems in end-uses markets depends primarily on CAPEX by organizations for constructing, rebuilding, or upgrading their HVAC solutions. The recession affects the amount of CAPEX spending and the company’s sales and profitability; there can be no assurance that existing capital spending will continue or that spending will not decrease during the economic downturn. This will harm the adoption of HVAC systems devices, used in the industrial and residential environments.
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The study involved four major activities in estimating the current size of the HVAC system market. Exhaustive secondary research was done to collect information on the market, peer market, and parent market. The next step was to validate these findings, assumptions, and sizing with industry experts across the value chain through primary research. Both top-down and bottom-up approaches were employed to estimate the complete market size. After that, market breakdown and data triangulation were used to estimate the market size of segments and subsegments.
Secondary Research
Secondary sources for this research study included corporate filings (such as annual reports, investor presentations, and financial statements); trade, business, and professional associations; white papers; certified publications; articles by recognized authors; directories; and databases. The secondary data was collected and analyzed to determine the overall market size, further validated through primary research.
List of major secondary sources
SOURCE |
WEB LINK |
International Energy Agency (IEA) |
https://www.iea.org/ |
The Japan Refrigeration and Air-conditioning Industry Association (JRAIA) |
https://www.jraia.or.jp/english/ |
The American Society of Heating, Refrigerating, and Air Conditioning Engineers (ASHRAE) |
https://www.ashrae.org/ |
Air Conditioning Contractors of America Association (ACCA) |
https://www.acca.org/home |
Air-Conditioning, Heating, and Refrigeration Institute (AHRI) |
https://www.ahrinet.org/Home |
Primary Research
Extensive primary research was conducted after gaining knowledge about the current scenario of the HVAC system market through secondary research. Several primary interviews were conducted with experts from both demand and supply sides across four major regions—North America, Europe, Asia Pacific, and RoW. This primary data was collected through questionnaires, emails, and telephonic interviews.
To know about the assumptions considered for the study, download the pdf brochure
Market Size Estimation
Both top-down and bottom-up approaches were used to estimate and validate the size of the HVAC system market and its various dependent submarkets. The key players in the market were identified through secondary research, and their market share in the respective regions was determined through primary and secondary research. This entire procedure involved the study of annual and financial reports of top players and extensive interviews with industry leaders such as chief executive officers (CEOs), vice presidents (VPs), directors, and marketing executives. All percentage shares and breakdowns were determined using secondary sources and verified through primary sources. All the possible parameters that affect the markets covered in this research study were accounted for, viewed in extensive detail, verified through primary research, and analyzed to obtain the final quantitative and qualitative data. This data was consolidated and supplemented with detailed inputs and analysis from MarketsandMarkets and presented in this report.
Bottom-Up Approach
The bottom-up approach was used to arrive at the overall size of the HVAC system market from the revenues of the key players and their shares in the market. The overall market size was calculated based on the revenues of the key players identified in the market.
- Initially, the companies offering heating, ventilation, and cooling equipment were identified, and their product mapping with respect to different parameters, such as implementation type and application, was carried out.
- The size of the HVAC system market was estimated based on the demand for HVAC systems from the different application areas and the revenue of the companies operating in the HVAC ecosystem.
- Primaries were conducted with a few major players operating in the HVAC system market to validate the global size of the market.
- Additionally, the size of the HVAC system market was validated through secondary sources, which included the International Energy Agency (IEA), The Japan Refrigeration and Air Conditioning Industry Association (JRAIA), The American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE), and Air Conditioning Contractors of America Association (ACCA). Other sources included company websites, press releases, research journals, and magazines.
- For calculating the CAGR of the HVAC system market, the historical and future market trend analyses were carried out by understanding the industry penetration rate of an HVAC system and their demand and supply in different application areas.
- The estimates at every level were verified and cross-checked through discussions with key opinion leaders such as corporate executives (CXOs), directors, and sales heads, as well as with the domain experts in MarketsandMarkets.
- Various paid and unpaid information sources such as annual reports, press releases, white papers, and databases were also studied.
Top-Down Approach
In the top-down approach, the overall market size has been used to estimate the size of the individual markets (mentioned in the market segmentation) through percentage splits from secondary and primary research.
To calculate the market size of specific segments, the most appropriate immediate parent market size has been used to implement the top-down approach. The top-down approach was implemented for the data extracted from the secondary research to validate the market size obtained.
The market share of each company was estimated to verify the revenue shares used earlier in the top-down approach. The overall parent market size and individual market sizes were determined and confirmed in this study by the data triangulation method and the validation of data through primaries. The data triangulation method used in this study is explained in the next section.
- Information related to revenues obtained from key manufacturers and providers of HVAC systems was studied and analyzed to estimate the global size of the HVAC system market.
- The HVAC system market is expected to witness a linear growth trend during the forecast period owing to the fact that it is a mature market with several well-established players serving various verticals.
- Revenues, geographical presence, key verticals, and different types of offerings of all identified players in the HVAC system market were studied to estimate and arrive at the percentage split of different market segments.
- All major players in each category (equipment type and application) of the HVAC system market were identified through secondary research and verified through brief discussions with industry experts.
- Multiple discussions with key opinion leaders of all major companies involved in the development of the HVAC system were conducted to validate the market split based on heating equipment, ventilation equipment, cooling equipment, implementation type, application, and geography.
- Geographical splits were estimated using secondary sources based on various factors, such as the number of players offering HVAC systems in a specific country or region and the type of HVAC equipment provided by these players.
Data Triangulation
After arriving at the overall size of the HVAC system market from the market size estimation process explained above, the total market was split into several segments and subsegments. Data triangulation procedures were employed wherever applicable to complete the overall market engineering process and arrive at the exact statistics for all segments and subsegments. The data was triangulated by studying various factors and trends from both, demand, and supply sides. In addition to this, the market size was validated using top-down and bottom-up approaches.
Market Definition
Heating, ventilation, and air conditioning (HVAC) is a mechanical system that provides thermal comfort and improves air quality in an enclosed space. It controls air temperature and humidity, allows fresh air intake, and maintains air quality in residential, commercial, or industrial buildings.
An HVAC system typically consists of various components, such as a furnace or boiler for heating, a central air conditioning unit for cooling, a ventilation system for air circulation, and various ducts and controls to distribute the conditioned air throughout the building. HVAC systems are essential for maintaining indoor air quality, controlling humidity levels, and providing comfortable temperatures for occupants of a building. They are commonly found in homes, offices, hospitals, and other commercial buildings.
Key Stakeholders
- Component Manufacturers
- Government and Research Organizations
- HVAC Contractors
- HVAC System Providers
- HVAC Software and Service Providers
- Maintenance and Service Providers
- Original Equipment Manufacturers (OEMs)
- Professional Services/Solution Providers
- Research Institutions and Organizations
- System Integrators
Report Objectives
- To estimate and forecast the size of the HVAC system market, in terms of value, based on heating equipment, ventilation equipment, cooling equipment, application, implementation type, and region
- To describe and forecast the market size, in terms of volume, based on cooling equipment, heating equipment, ventilation equipment, and region
- To describe and forecast the market size, in terms of value, for four major regions—North America, Europe, Asia Pacific, and RoW
- To provide detailed information regarding major factors such as drivers, restraints, opportunities, and challenges influencing the market growth
- To provide a detailed overview of the value chain of the HVAC system market
- To strategically analyze micromarkets1 with regard to individual market trends, growth prospects, and contributions to the total market
- To strategically profile key players and comprehensively analyze their market position in terms of ranking and core competencies2, along with a detailed competitive landscape for the market leaders
- To analyze major growth strategies such as product launches, expansions, joint ventures, agreements, and acquisitions adopted by the key market players to enhance their position in the market
- To analyze the impact of the recession on the HVAC system market
Available Customizations
With the given market data, MarketsandMarkets offers customizations according to the specific requirements of companies. The following customization options are available for the report:
- Detailed analysis and profiling of additional market players (up to 5)
- Additional country-level analysis of the HVAC system market
Product Analysis
- Product matrix, which provides a detailed comparison of the product portfolio of each company in the HVAC system market.
Growth opportunities and latent adjacency in HVAC System Market
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