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Air Conditioning System Market to Reach USD 215 Billion by 2031 Driven by Rising Demand for Energy-Efficient Cooling Solutions

The Air Conditioning System Market Size is expected to reach USD 215 Billion by 2031, growing at a CAGR of 6.87% over the forecast period 2024-2031, fueled by a rising demand for energy-efficient cooling solutions. Consumers and businesses are increasingly prioritizing sustainable and cost-effective options, driving the adoption of inverter technology, variable refrigerant flow (VRF) systems, and low-global warming potential (GWP) refrigerants.

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Some of the Major Key Players in this Report:

  • Haier Group Corporation
  • LG Electronics Inc.
  • Daikin Industries Ltd.
  • United Technologies Corporation
  • Hitachi-Johnson Controls Air Conditioners Inc.
  • Carrier Corporation
  • Mitsubishi Electric Corporation
  • Mahle GmbH
  • Denson Corporation
  • Calsonic Kansei Corporation
  • Sanden Holdings Corporation
  • Eberspaecher Holding GmbH & Co.
  • Valeo SA
  • Keihin Corporation
  • Subros Limited.

Growing Demand Across Residential and Commercial Sectors

The SNS Insider report highlights a market exceeding USD 126 Billion in 2023. This growth is attributed to the widespread application of air conditioning systems across various sectors, including residential spaces, shopping centers, commercial buildings, and entertainment venues. In developing nations, affordability remains a challenge, particularly for environmentally optimized products. However, air conditioning has become an essential part of modern infrastructure, especially in hot and arid regions, impacting indoor environments and supporting the functionality of modern spaces.

Multiple Factors Propelling Market Expansion

Several factors are expected to propel market growth further. The promising growth of the construction and tourism industries, coupled with rising disposable incomes globally, will encourage the uptake of various air conditioning systems. Additionally, the growing preference for energy-efficient systems and the increasing popularity of portable units will further benefit the market.

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Market Segmentation:

By Type

  • Unitary
  • Rooftop
  • PTAC

By Technology

  • Inverter
  • Non-inverter

By End-Use

  • Residential
  • Commercial
  • Industrial

Rising Population and Government Initiatives

The rising global population is anticipated to positively influence residential and commercial construction activities, consequently increasing demand for air conditioning systems. For instance, the surging population in Gulf countries is expected to significantly contribute to construction spending. Government initiatives focused on promoting energy-efficient air conditioning, such as India’s Super-Efficient Air Conditioning program, further support market expansion.

Recent Developments Showcase Innovation

Recent developments showcase continuous innovation within the air conditioning industry. In January 2022, LG Electronics unveiled its extensive range of HVAC solutions at the AHR Expo, demonstrating a commitment to catering to various market segments. Similarly, Voltas introduced its PureAir Inverter AC in March 2022, featuring advanced technology for enhanced indoor air quality. In February 2023, Godrej Appliances unveiled India’s first leak-proof split AC, highlighting a focus on user experience and safety.

Unitary Segment Dominates Due to Widespread Residential Use

By type, the unitary segment is expected to hold the dominant revenue share exceeding 40% in 2023. Unitary air conditioners are widely used in households, with the growing residential sector driving demand. Additionally, the ease of integrating unitary ACs with existing heating systems further strengthens the segment’s position. However, the PTAC segment is anticipated to witness a healthy CAGR due to its increasing adoption in hospitality and residential sectors, further bolstered by technological advancements like inverter technology and wireless connectivity.

Residential Segment Leads Due to Climate Change

The residential segment dominated the market in 2023 with a revenue share exceeding 41%. Climate change, resulting in rising global temperatures, has made air conditioning systems a necessity rather than a luxury. This trend is expected to continue as temperatures rise further. Consequently, residential ACs are projected to witness significant growth in the coming years.

Impact of Global Events: Russia-Ukraine War and Economic Slowdown

The ongoing Russia-Ukraine war is expected to disrupt supply chains and lead to price fluctuations for raw materials used in air conditioning systems. Additionally, the war has triggered inflationary pressures, potentially impacting consumer spending on non-essential goods like air conditioners. An economic slowdown could further dampen market growth due to reduced consumer purchasing power and stalled construction projects. However, the long-term fundamentals of the air conditioning market remain strong, with the underlying demand for energy-efficient cooling solutions expected to prevail over these headwinds.

Asia Pacific Leads Due to Rapid Urbanization and Economic Growth

Asia Pacific dominated the market in 2023 with a revenue share exceeding 48%. Rapid urbanization, infrastructure development, rising disposable incomes, and a growing middle class are driving the positive outlook for air conditioning systems in this region. The surging construction of residential and commercial buildings is a significant factor fueling demand. Additionally, the establishment of new industries, improved infrastructure, and strong economic growth in Asian countries are contributing to market expansion. China, for instance, leads globally in air conditioning unit sales, demonstrating the immense potential within the Asia Pacific region. Key players are strategically setting up manufacturing facilities in Asia to cater to this burgeoning demand.

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Key Takeaways

Rising demand for energy-efficient cooling solutions is driving the air conditioning system market.

Growth is expected across residential and commercial sectors, fueled by factors like urbanization and rising disposable incomes.

Technological advancements and government initiatives promoting energy

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