Heating, Ventilation, and Cooling (HVAC) System Market Size, Share & COVID-19 Impact Analysis, By Type (Single Split Systems, Variable Refrigerant Flow (VRF) Systems, Chillers, and Others (Multi-split systems, etc)), By Application (Commercial, Residential, and Industrial), and Regional Forecast, 2023-2030

The global heating, ventilation, and cooling (HVAC) system market size was valued at USD 150.04 billion in 2022. The market is projected to grow from USD 157.71 billion in 2023 to USD 228.74 billion by 2030, exhibiting a CAGR of 5.5% during the forecast period.

Heating, ventilation, and cooling (HVAC) system transfer air between indoor and outdoor areas. They filter the indoor air to keep the environment healthy and maintain humidity at an optimal comfort level. HVAC equipment is used in shopping centers, industrial facilities, warehouses, and more. It can be applied to different places and types of buildings, such as adequate air conditioning through heating and cooling, air pressure, and air supply required. A quality that makes the occupants of the building comfortable and safe. The global market is undergoing tremendous changes due to the increasing integration of HVAC products with Internet of Things (IoT) technologies, making HVAC products more innovative and affordable. To achieve energy efficiency, the focus was connecting different sensors in the building ecosystem, including HVAC.

The growing demand for hybrid heating, ventilation, and cooling system is a new trend. The increasing demand for automatic temperature control is driving the growth of hybrid systems. In addition, increasing construction activities in the commercial and residential sectors and demand in the food and beverage and telecommunication sectors are expected to contribute significantly to the growth of the market. However, the lack of skilled professionals is expected to impact the market growth in the near future.

COVID-19 IMPACT

 Imposed Limitations During COVID-19 Pandemic Adversely Affected Market Growth 

In the early stages of the global health crisis, restrictions levied by the government to prevent the spread of COVID-19 affected the day-to-day operations of many car manufacturers. Strict restrictions and supply chain disruptions resulted in a shortage of semiconductor chips and threatened most players in this market. In 2020, several economies in the Asia-Pacific region experienced drastic declines in GDP as many of the countries' economic activities came to a sudden halt.

Exports of machinery from China, Japan, and ASEAN countries declined. The introduction of travel restrictions, the emergence of the delta strain of COVID-19, and other issues impacted the global value chain (GVC) in 2021. Car exports to the Association of Southeast Asian Nations (ASEAN) were volatile, mainly electrical and machinery products. Precision Machinery's newest products have kept exports above pre-pandemic levels.

LATEST TRENDS

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Rise in the Incorporation of Building Automation Systems to Propel Market Growth

BAS units that control and monitor HVAC and other devices in designated buildings are equipped with computerized and digital communication tools to help these systems improve energy efficiency. The number of integrated BAS units has increased due to the increased construction projects and upgrades. BAS technology has been enhanced through improvements in sensor technology, cheaper and faster communication systems, and improved user interfaces.

Manufacturers implement open protocols, including the Internet Protocol, to provide advanced surveillance solutions. BAS is becoming a widely used technology to improve the interaction and operation between building HVAC, lighting, fire, and security controls. With energy efficiency guaranteed through continuous improvement in BAS technology, building owners can improve facility management with an integrated and easy-to-use HVAC solution. These advantages are expected to drive the global heating, ventilation, and cooling system market share during the forecast period.

DRIVING FACTORS

Rise In Construction Industry to Boost Market Growth

In the long term, the global construction industry is expected to grow steadily due to low-interest rates and steady economic growth in some European countries. The construction of hotels, theme parks, private and government offices, sports, and convention centers is increasing, supporting this market in the construction sector. The global market relies heavily on the construction industry for revenue generated from new installations, such as residential and commercial. Building renovation is a major source of revenue for this industry.

The industry has seen a greater influx of public and private investment, mainly in countries such as Spain, Cyprus, Italy, and the Netherlands. The Construction Information Center (CIC) has revised its 2022 growth forecast for the European construction sector. This was due to improved performance in some large developed urban markets and good prospects for the European economy.

Office buildings and high-rise buildings use HVAC systems to maintain the temperature inside the building. Also, the use of residential HVAC system is increasing, especially in hot regions such as APAC and the Middle East. Improvements in residential design and increased building permits are contributing to increased demand for HVAC system in the market. The non-residential construction sector saw growth, particularly in office construction for technology and financial companies. This is because private investment has increased. Similarly, construction activities in hotels and hospitals increase the demand for these systems. These developments will focus on this market during the forecast period.

RESTRAINING FACTORS

Shortage of Skilled Labor to Impact Market Growth

The lack of qualified technicians for heating, ventilation, and cooling systems is expected to impact the market growth over the past few years. According to the Bureau of Labor Statistics, the U.S. experienced 25.0% of workforce retirement till 2020. Besides, the companies are likely to seek around 115,000 new heating, ventilation, cooling, and refrigeration-qualified technicians in the next four years. Therefore, a shortage of skilled technicians is expected to hinder the market’s growth in the forthcoming years.

SEGMENTATION

By Type Analysis

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Variable Refrigerant Flow (VRF) Systems Segment to Portray Highest CAGR owing to Multiple Control Function in One Device

Based on type, the market is segmented into a single split, variable refrigerant flow (VRF) systems, chillers, and others.

Variable Refrigerant Flow (VRF) systems sub-segment is expected to grow at a substantial CAGR due to its offering two or more controls in a single device. Moreover, the economic and environmental nature of variable refrigerant flow systems is two important reasons for their rise. For example, VRF technology only requires the installation of one HVAC unit, saving money on additional units and equipment, which is important for large buildings.

Moreover, single-split is anticipated to have significant growth due to its two separate units, including a compressor located inside and outside the air exhaust unit. Unlike systems that require network connections through the roof, split air conditioners rely on a set of ducts to connect the outdoor and indoor units.

Furthermore, chillers have a considerable rise due its advantages such as portability and easy maintenance. These are used in restaurants, hotels, kitchens, and dining rooms to maintain the temperature.

By Application Analysis

Commercial Segment to represent highest Market Share Due To Expansion of Buildings

Based on application, the market is divided into residential, commercial, and industrial.

The commercial HVAC space offers tremendous opportunities for growth. The segment is expected to grow at a CAGR of over 6.8% between 2023 and 2030. Several trends, including green and smart technologies for automation systems, are expected to play a major role in shaping the future of the commercial heating, ventilation, and cooling system market. The slow transition from the WFH model to a hybrid operating model is expected to increase the demand for HVAC in commercial environments.

Whereas the residential sector experienced major growth in 2022. An increasing number of multi-family and single-family homeowners are creating opportunities in the residential HVAC sector, therefore the demand for HVAC system is expected to be volatile in the developed countries. However, demand from new markets, especially emerging markets, will be slightly higher. This is mainly due to population growth in emerging markets and market maturity in developed markets.

Furthermore, the industrial sector is witnessing extensive growth due to the increasing adoption of cleanrooms in industries and strict regulations regarding the use of explosion-proof HVAC equipment in hazardous environments.

REGIONAL INSIGHTS

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The market report's scope comprises five major regions, North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America.

The APAC region holds the largest share of the global heating, ventilation, and cooling system market due to increasing demand from the residential, commercial office, and building sector. Major economies in APAC including, China, Japan, and India, are witnessing an increase in commercial construction activity as many companies in various industries are opening offices in different locations to secure their target and potential customer base. Furthermore, china's market is experiencing an influx of public and private investment in real estate projects and various residential, industrial, and commercial developments due to explosive urbanization, which is contributing to the heating, ventilation, and cooling system market growth.

India is emerging as a leading country in the Asia Pacific region. Government agencies are offering foreign direct investment (FDI) schemes that benefit manufacturers. As a result, these manufacturers, such as DAIKIN INDUSTRIES, Ltd. and Johnson Controls, pay special attention to the production and development of heating, ventilation, and refrigeration systems. For example, Johnson Controls – Hitachi Air Conditioning invested USD 22.5 million in October 2019 to launch a new state-of-the-art development center in Gujarat, India. The main focus is on the development of commercially packaged air conditioners and residential air conditioners for the Indian, Middle East, Southeast Asian, and European markets which rising the market share.

Furthermore, Europe is predicted to witness significant growth of the market attributed to Western Europe, which has two major economies i.e., France and Germany accounting for one-third of the market. The major factors driving the sales of HVAC equipment in Europe are increasing average construction costs, retail construction projects, industrial development, increasing government spending on sustainable building development, changing climatic conditions, rapid urbanization, and increasing disposable income in European countries.

Moreover, North America is also expected to hold a major share of the market due to the green building strategy being one of the most important footholds in this market. Green buildings are designs and structures that utilize nominal energy to cool or heat the property. Builders restore ventilation, heating, and air conditioning systems. They focus on using sustainable building materials that maintain a constant building temperature and bring in natural airflow to reduce the energy consumption of the HVAC system.

The Middle East & Africa is projected to witness considerable growth in upcoming years. Due to regulations adopted by the governments of Middle Eastern countries to favor energy-efficient and environmentally friendly refrigerants that have the least impact on the environment, the need for these systems is increasing as HVAC systems are environmentally friendly through the use of refrigerants to increase energy efficiency in the region.

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Latin America continues to be considered as emerging region globally. The growth is primarily due to the increased adoption of split units, which are easier to install, more energy efficient.

KEY INDUSTRY PLAYERS

Prominent Players Focus on Strengthening High-End Product Sales and Distribution Network

Prominent manufacturers are investing in research and development initiatives to focus on advanced HVAC development, expand their product lines, and gain a competitive edge in the market. Another attractive prospect in the form of IoT is expected to change the way industry works as it creates an environment where all components can be connected and device operations can be efficiently managed through intelligent control solutions.

Furthermore, due to the extremely competitive sector, R&D expenditures in the heating, ventilation, and cooling system market are inadequate, with significant investments made by large vendors. Short time to market and limited adoption of new technologies are also challenging for HVAC vendors. Research and development investments focus on creating added value by reducing costs in the production process and improving the technology of existing products, rather than developing new products. As a result, many mergers and acquisitions are taking place to improve and develop products and features to survive in the global market.

LIST OF KEY COMPANIES PROFILED:

• Johnson Controls (Ireland)


• DAIKIN INDUSTRIES, Ltd. (Japan)


• Lennox International Inc. (U.S.)


• Carrier (U.S.)


• Mitsubishi Electric Corporation (Japan)


• Nortek Global HVAC LLC (U.S.)


• LG Electronics (South Korea)


• Emerson Electric Co. (U.S.)


• Trane (Ireland)


• SAMSUNG (South Korea)

KEY INDUSTRY DEVELOPMENTS:

• In November 2022: Daikin introduced the Emura Indoor air conditioning system for air purification and room cooling and heating. With its slim and discreet shape, Emura fits well in various indoor spaces, from living rooms to offices, aiming for efficient temperature control.


• In September 2022: Trane Technologies announced innovations that improved two popular rooftop units to expand its electric heating and cooling portfolio and improve energy efficiency, connectivity, and building control.


• In April, 2023: Johnson Controls announced an investment in a partnership with the International WELL Building Institute i.e., IWBI, to support its vow to healthy building solutions for employees and customers.


• In May, 2022: Daikin invested in Wlab to accelerate the development of AC solutions for safe and reliable air environments.


• In January, 2023: Lennox Industries introduced the new Lennox S40 Smart Thermostat and accessories, comprising the Lennox Smart Room Sensor & Lennox Smart Air Quality Monitor.

REPORT COVERAGE

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The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product/service types, and leading applications of the product. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

REPORT SCOPE AND SEGMENTATION