In contrast to 2012, there was a recovery in many markets in 2013. The biggest growth was seen in Argentina, Vietnam, Brazil, and South Africa. Growth was due to several factors, including general economic growth; transition from R-22 to R-410A, which has increased average selling prices; increases in average due to currency fluctuations in local currencies against the Euro and U.S. dollar; and the boost of the 2014 World Cup and 2016 Olympics in Brazil.

The U.S. has also recovered as the total air conditioning market grew by 6 percent in value terms and has reached almost $12.8 billion in 2013. The growth was primarily generated by a strong performance of the domestic demand and from a reduction of the fiscal drag after the most recent adjustments in the public budget.

Europe is in slow recovery, but any significant change is not expected until 2015. Out of the top seven countries (Russia, Italy, Germany, Turkey, France, U.K., and Spain), only Italy and Spain declined in 2013. The top seven countries comprise 70 percent of the European market by value. Energy-efficiency-driven legislation continues to add to the strain in the market including the potential switch to new refrigerants, such as R-32, and tax threats on hydrofluorocarbons (HFCs) (not to mention ever more stringent regulations on their handling and servicing, which you can read more about here).

Market conditions in the Middle East, Africa, and Indian subcontinent have been further dampened following the Arab Spring uprisings and the civil war in Syria. The overall region managed to grow 2 percent by value. The best-performing countries were South Africa, Nigeria, and India, in order of growth.

The worst-performing markets were Egypt, Saudi Arabia, and Iran. The ongoing political situation in Egypt is making trading conditions difficult. The aid from Gulf Arab allies aims to stimulate the economy in the hope that investors and tourists will return to the country. The Saudi Arabian market is badly affected as more than one-third of construction projects have been affected. The government plans to increase the number of Saudi nationals employed, replacing immigrants.

This combined with the move to improve SEER ratings has caused the market to decline. However, the future is optimistic for the country with many large projects in the pipeline.

Ongoing trading sanctions continue to hold back the Iranian market.

Splits

Total sales of all splits increased by 8 percent in 2013, reaching more than 99 million units. The global economic recovery was behind the healthy growth after a 3 percent drop in 2012. The growth was seen in all types of splits — Japanese and U.S. ducted, multi splits, and variable refrigerant flow units.

In Europe, sales of all splits increased by 2.5 percent by volume in 2013 when compared to 2012. The ErP directive and the revised f-gas regulations were the most influential legislations in the splits market. The enforcement of the ErP Directive started in January 2013, and affects splits below 12-kW capacity. The level of inverter has, therefore, increased significantly for units less than 12 kW. The overall penetration levels for the seven key European countries has reached 71 percent by value and 50 percent by volume in 2013. This ratio is expected to change drastically when on-off stock depletes in the Turkish market in the next couple of years. Russia is the only main market of splits that does not comply with the European directive.

Asia-Pacific holds the greater share of split sales, representing 69 percent by volume and 66 percent by value. Total volume increased by around 8 percent and value by 9 percent in 2013. The main markets that showed the strongest growth were Vietnam, Indonesia, and China, with the latter representing by far the largest market in the region of 60 percent by value.

Overall, the Asian-style ducted split market accounted for 30 percent of the total ducted splits marketed in 2013, by volume. The market is expected to grow at a higher rate than the U.S.-style ducted splits.

The VRF market has proven more resilient to the tough market conditions. The main perceived advantages are ease of installation, as its compact size does not require big plant rooms; its one-stop-shop approach offers a quick design and the installation process favors this product for smaller and medium-sized cooling outputs. The world market is expected to grow 12 percent compound annual growth rate (CAGR) over the forecast period.

A growing number of VRF units are being installed with a dedicated outdoor air system (DOAS), offering more comparable ventilation requirements and allowing the units to compete with some conventional central plant systems.

Rooftop

Rooftop units are defined as light commercial applications, primarily above 5 ton (approximately 20 kW). Total world sales amounted to 1.2 million units with a corresponding value figure of $3.7 billion. This represents a relatively flat picture; growth was 2 percent by value and 1 percent by volume over 2012. The main trend in rooftops is the increase in the penetration of inverter models — particularly in Europe.

The Americas is, by far, the largest market, representing 84 percent of sales by volume of the entire market for rooftops. Mexico is the second biggest market after the U.S., growing by 4 percent, by volume.

In Europe, the market for rooftop units in 2013 was just below 13,000 units. This represents a 5 percent increase by volume compared to a 12 percent drop in 2012. Most markets increased in 2013. The fastest growing countries were Russia, U.K., and Turkey, albeit some of these are from a very small base.

Indoor Packaged

Indoor packaged units are normally defined as self-contained units for light commercial applications, which have indoor installation to respond to space constraints. These remain a niche application in most European countries.

For North America, the definition of an indoor packaged unit is rather confusing and contradictory. In fact, packaged air conditioning is a term used to mainly define self-contained residential air conditioners, which may be installed outdoors or on a rooftop.

In this report, for consistency with the other countries, only indoor installed packaged unit market sizes are reported. The outdoor residential packaged units are not included in the market sizes and are investigated in the Building Services Research and Information Association (BSRIA) air conditioning report. Indoor packaged units are a small niche of the total market in the U.S. In most commercial applications, rooftops are utilized.

Total world sales of indoor packaged units amounted to some 106,000 units with a value of $574.4 million. This product is declining in popularity in many countries due to a preference for splits, chillers, and VRF.

The Japanese market is the biggest market accounting for nearly one-quarter of world sales. This amounted to a downward trend for the product, with an estimated CAGR of minus 6 percent by volume to 2017.

The Asia-Pacific region and European nations are the major territories for this product, comprising 75 percent of the world market by volume.

Chillers

The world chiller market in 2013 increased by 5 percent in volume and 3 percent in value, to some 400,000 units and just under $8.5 billion.

The most popular chillers are screw and scroll. Together with reciprocating chillers, they account for 94 percent of the total market by volume, though reciprocating chillers are in decline and becoming a niche market.

Nearly 80 percent of the chillers were air-cooled by volume and 41 percent by value. 13 percent of the chillers were below 100-kW capacity range by value.

Asia-Pacific is the largest market for chillers, with nearly 300,000 units, constituting 74 percent of the global market and nearly 50 percent in value terms for 2013. The market in the region grew 5 percent by value. This positive trend is expected to continue at an annual growth rate of 4 percent.

In Europe, the chiller market remained flat in value terms; however, it contracted by 5 percent in volume terms in 2013. There is an increase in the number of chillers equipped with the inverter technology as well as utilization of free-cooling technology. This technology allows chillers to improve their SEER ratings for cooling.

In the Americas, the chiller market increased 5 percent by value and volume in 2013, and is also expected to show moderate growth in 2014. The recovery seems to be on its way with an expected annual growth of 7 percent for the forecast period in value terms. Screw, centrifugal, and oil-free centrifugal chillers are expected to be the market segments to benefit most from the recovery within the next two to three years. Efficiency, performance, and smooth operation including noise control are the industry focus.

Airside

In 2013, the airside market reached nearly 6.8 million units, up 6 percent by volume and 5 percent by value compared to 2012 figures.

The air-handler unit (AHU) market value increased from 759,114 to just over 800,000 units. The trend toward customized units and the inclusion of heat recovery models are pushing the drive toward energy-efficient solutions.

Europe represents the largest region for AHU sales with 32 percent, by volume, and Asia-Pacific finished in second place with 31 percent.

EU legislation on building ventilation is driving the sales of smaller standard units with heat-recovery units. U.K. and Germany are the key markets where standard units are becoming more popular. However, this also invites more suppliers to enter these markets.

This legislation has directly benefited the air-handling unit industry; however, the lack of new construction has not given the necessary boost to the market.

Russia continues to have the largest AHU market in Europe, representing 21.5 percent by volume, followed by Germany with 20 percent — though Germany holds the greater share by value of 27 percent. The main reason behind this is that penetration levels of heat-recovery units in Russia are very small due to lack of legislative requirements. In contrast, around 60 percent of the systems in Germany have been incorporated with heat-recovery units.

The fan coil market increased by 6 percent in volume compared to 2012. Total world sales amounted to nearly 6 million units in 2013. As with chillers, China holds the greatest market share by volume of 48 percent, and 24 percent, by value.

Content for the European Spotlight is provided courtesy of Refrigeration and Air Conditioning Magazine, London. For more information, visit www.racplus.com.

Publication date: 8/18/2014

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