GLOBAL AUTOMOTIVE HVAC MARKET
- In terms of automatic AC penetration, Japan has a higher penetration followed by Europe, China, and the US
- Europe has a higher penetration of Multi-zone HVAC followed by US, China and Japan
- Air purifiers along with dust filters and pollen filters have seen increased penetration with China seeing high penetration of PM 2.5 filter
- Among the pickups in the USA – Optional automatic ac is present in most of the trims which have manual AC
- Among the vans in Japan – Automatic ac is present in almost all the top-selling vans as a standard feature
- Honda offers Dual zone HVAC on most of its beset-selling vehicles including Civic, Accord, CRV in US, EU, China as well as Japan. It is also among the best filtration systems like PM 2.5 and Pollen filters in China and Plasma cluster technology in Japan
- Honda, has introduced a new cabin AC filter system in May 2021 to be rolled out in Europe with four layers to keep COVID-19 viral load under control.
- Hyundai Motor group has announced the development of a new 3 fold series air-conditioning technologies.
- Among Premium European OEMs, BMW, Volvo and Mercedes had 100% installation rate of automatic HVAC worldwide in 2019
- The German automaker BMW supports automatic air conditioning, air distribution system for driver as well as passengers, automatic climate control and fogging sensor.
- As of 2020, the global EV HVAC Compressor market looks fragmented with 8 major players occupying 91.1% of the market.
- In 2019, Manual HVAC system has dominated in the markets like India, Indonesia and Latin America, where the manual HVAC penetration is more than ~55%
- In Latin America, the COVID effect in 2020 is expected to be severe in the region and the sales dip in excess of 30 % is estimated. Brazil being one of the severely hit country by COVID-19 pandemic contributes majorly.
- Johnson Electric in the year 2021 launched an AML condensation management device for the automotive industry.
- In October 2020, MAHLE signed an agreement with Keihin Corporation to improve the market access in Japan as well as Southeast Asia through this purchase agreement.
- Hanon Systems announced the acquisition of the condenser sector of Keihin Corporation in May of 2021 for operations across North America and Europe.
HVAC stands for Heating, Ventilation and Air Conditioning. The primary purpose of HVAC is to clean, cool, heat, regulate, ventilate and dehumidify the air entering the cabin. The desire for more comfort and luxury has led to development of climate control system inside an automobile. Major components of an HVAC are compressor, condenser, evaporator, pressure regulating devices, thermal expansion valves, orifice tubes and accumulator. It is now available in most of the high end passenger cars. However, high maintenance cost is restraining its growth.
GLOBAL AUTOMOTIVE HVAC MARKET SEGMENTATION
- VW Group
- Chinese OEMs
- Indian OEMs
- Other OEMs
By Vehicle Type
- Passenger Cars
- Commercial Vehicles
- Asia-Excluding China
GLOBAL AUTOMOTIVE HVAC MARKET DYNAMICS
The demand for thermal systems and automatic climate control is driving the global HVAC market. Moreover, the need for eco-friendly refrigerants and coolants will propel the HVAC market. The rise in demand for thermal comfort and increase in penetration of automatic HVAC expected to propel the HVAC market.
Growth in demand for safety, comfort and latest features has led to several technological developments in HVAC. The HVAC system contributes to defrosting of windows, demisting windshields and dehumidifying air which improve visibility and safety of passengers. Thus, HVAC by providing safety and favourable conditions inside the cabin is anticipated to propel the automotive HVAC market growth.
The auto manufacturers have been incorporating air purifiers for the cabin of the car. Purifiers are an integral part of HVAC. The development in this segment is expected to expand the HVAC market globally.
Due to the COVID-19 pandemic, the growth of this sector was hindered as the sales of vehicles plummeted across the globe. The hindrance was primarily due to the travel restrictions as well as the declined safety reserves of the people due to the low economy. The Asia-Pacific region is now estimated to be the biggest segment in the automotive HVAC sector due to the high vehicle penetration in production level across China, Japan and India.
The Asia-Pacific region is estimated to observe developmental attributes due to the concentration of key automakers, high vehicle penetration and several manufacturing units set up in countries such as South Korea, India as well as China. Governments across the globe are trying to restore the automotive market to complement the pace of recovery. For instance, Indian government is now encouraging investments by foreign investors with programmed courses to enable innovation and development.
AUTOMOTIVE HVAC MARKET BY COMPONENTS
Compressor is the primary component in a HVAC system. The traditional type of compressor was reciprocating type wherein it used to be driven directly by crankshaft of the engine. However, with advancement in technology and rise in EV there has been need for improved compressor and scroll compressors came into market. The development of different components used in HVAC has helped the market grow steadily and will help to expand in future. The below chart depicts the component wise market in HVAC system:
AUTOMOTIVE HVAC MARKET BY TECHNOLOGY
Automatic HVAC System market is expected to grow at rapid rate compared to the manual one. The need for ease in operation and desire for more comfort has directly influenced the automatic HVAC market. These systems require sensors inside the cabin to detect the temperature and outside temperature, so as to function the HVAC accordingly to the comfort of passengers.
Manual HVAC system is mostly found in the entry level budget cars. They consist of lot of knobs and dials to control the air flow and the temperature. It requires human intervention to start and stop the system. The high cost of automatic HVAC has made the auto manufacturers to settle for manual ones for the budget cars.
AUTOMOTIVE HVAC MARKET BY VEHICLE TYPE
Commercial vehicles are experiencing steady growth in the HVAC market. The major factors being air quality inside the truck cabin, the need to improve it and to increase the thermal comfort of the driver. Increase in vehicles used by E-commerce and logistics sector is expected boost the HVAC market in commercial vehicles. Also HVAC installation in buses and other public transport systems is anticipated to help increase the HVAC market.
Passenger cars accounted for three quarters of the overall revenue of the HVAC market. Over the years air conditioning in a car has become most standard option. Other climate control features are added as a standard feature in luxury and high end SUVs. However, the entry level cars are equipped with at least manual HVAC systems, if not for automatic ones.
US AUTOMOTIVE HVAC MARKET
The US automotive HVAC market is second biggest globally. The extreme weather conditions either its summer or winter has been major factor for increased HVAC market in passenger cars. Most of the top selling passenger cars are fitted with automatic HVAC control system in few mid and higher variants.
In the pickup truck segment, the top 3 best-sellers have ~40+% installation rate of manual HVAC which is substantially higher than the overall manual installation in the country i.e. ~25%.
US the 2nd biggest auto market in the world, due to being one of the worst affected country by COVID-19 in 2020, the market is expected to take extra time to get back to its pre-COVID-19 sales volume.
The Japanese OEMs offer Dual/Tri zone HVAC systems on many best-selling vehicles.
EUROPE AUTOMOTIVE HVAC MARKET
Owing to high share of Premium car sales(21% share of new cars) and extreme climate conditions in Europe has been driving the automotive HVAC market.
Since German auto makers are also the largest manufacturers of premium cars in EU and worldwide, the European automotive HVAC market is among the biggest in Revenue.
Among the entry level hatchbacks, very few of the top selling A segment cars in Europe are equipped with automatic HVAC, most of them are fitted with manual climate control on low and mid variants.
Similar to China the Europe market is also anticipated to see a linear spike in the HVAC market value from 2021.
The increased adoption of EVs in Europe will help to raise the market value in the region and will help to reach close to market value by 2023 itself.
CHINA AUTOMOTIVE HVAC MARKET
China is the #1 HVAC automotive market by volume. In China manual air conditioning is mostly found in top selling budget cars. But in top-selling vehicles like Nissan Sylphy, Volkswagen Lavida, automatic air conditioning is found only on top trims. In Haval H6, Dual zone temperature zone control is available on 8 out of 13 variants.
The premium cars which accounted for 11% of new cars sold in China are also incorporated with PM2.5 filter device in the car.
The decision from the Chinese government to extend the incentives for EVs till 2022 will boost the sales of these cars which in turn directly increase the market size of HVAC in the country.
The gradual increase in sales and the fact being facing comparatively less COVID-19 casualties compared to other major markets has helped the region to achieve higher CAGR i.e. 6.0%
The region witnessed the 2nd highest application of rear a c vents after US of about 64 % in top 30 cars in 2019. The inclusion of rear a c vents increases the individual vehicle HVAC value by at least 4-5%.
INDIA AUTOMOTIVE HVAC MARKET
In India,where average transaction value per car was among the lowest in the world at $10,000 in 2019, automatic climate control(ACC) has less than 40% fitment rate. Many B-segment hatchbacks are now offering it on mid and higher trims.
Maruti Suzuki, the market leader in India with more than 50% market share is now offering ACC on B and C segment vehicles, therefore fitment rate has climbed up sharply between 2016-2019.
Among the domestic OEMs Tata has take the lead by offering ACC on higher trims of budget hatchback Tiago. Mahindra ,the other homegrown major is the only OEM among top 30 best-sellers to offer dual zone climate control offered on mid and higher trims of Mahindra XUV 300.
In India 2019 witnessed sales of 2.93 million units. But the COVID-19 impact in 2020 is anticipated result in being the worst affected region in terms of sales.
Overall sale volume is expected witness a slump of 25% in 2020. In the month of April 2020, the country saw complete lockdown resulting in zero sales
JAPAN AUTOMOTIVE HVAC MARKET
Japan is among the most biggest individual market in terms of automotive HVAC fitment and Revenue. Manual HVAC fitment is minimal even on the low cost kei cars, which account for more than 35% share in new car sales every year.
Honda is now offering high performance odorizing filter and Plasma cluster technology as standard on top0selling vehicles like Freed, Vezel Fit and Shuttle.
Most of the Standard segment cars sold in the country are fitted with dual and tri-zone climate control.
Japan has the one of the highest number of vehicle per capita, with only 126 million population, the country sold 4.34 million passenger cars in 2019.
Keihin Products were installed in Honda Passport and Ford Ranger automobiles in North America region, and in Subaru Forester and Honda CR-V hybrid models launched in Japan.
GLOBAL AUTOMOTIVE HVAC MARKET SIZE AND FORECAST
The automotive HVAC market was initially valued at $22.1 billion in the year 2020 and was expected to grow at the rate of CAGR of XX% to attain a value of $XX billion by the year 2026.
The manual AC vehicles share in 2025 is expected to further less with only ~XX%, due to increased adoption of automatic AC in the regions which has lower automatic HVAC penetration
Many manufacturers are striving hard to develop compact and lightweight HVAC systems. This will help in less fuel consumption, and help in boosting the HVAC market.
There has been use of passive absorbers in the HVAC system. These absorbers are fitted to reduce the noise generated inside the cabin by these systems. The development in this area of expertise will help increase the HVAC market.
To understand the trends in Automotive HVAC market , read our article TOP 7 AUTOMOTIVE HVAC MARKET TRENDS
RECENT TRENDS IN AUTOMOTIVE HVAC MARKET
- The company Honda, has introduced a new cabin AC filter system in May 2021 to be rolled out in Europe. The new filter system has a four-layered filter which keeps COVID-19 viral load out of the cabin; it captures and inactivates almost 100% of the viral load.
- The company Johnson Electric in the year 2021 launched an AML condensation management device for the automotive industry.
- The company Hyundai Motor group has announced the development of a new 3 fold series air-conditioning technologies for improved quality of air in vehicles as well as to create a pleasant indoor environment for users.
- In September 2020, the company MAHLE developed a smart AC system to fight off against fine particulate matter in the cabin of a vehicle
- The German automaker BMW supports automatic air conditioning, air distribution system for driver as well as passengers, automatic climate control and fogging sensor.
RECENT PARTNERSHIPS IN AUTOMOTIVE HVAC MARKET
- In October 2020, the company MAHLE signed an agreement with Keihin Corporation to improve the market access in Japan as well as Southeast Asia through this purchase agreement.
- In July 2020, DENSO announced that they have merged fully with their subsidiary DENSO IT Solution Inc. The deal is an absorption-type merger which will promote digitalisation in the whole company and facilitate application of data.
- In March 2020, a UK based HVAC producer, Swegon announced acquisition of Waterloo Air Products, the air terminal specialist.
- In March 2020, the company Gardner Denver merged with Ingersoll Rand’s sector for industrial development.
- Lumax Group has extended its JV with Stanley Electric in the HVAC panel products line.
- BorgWarner announced that it would be supplying advanced cabin heating technology for a new electric vehicle for a global known EV automaker.
The top global automotive HVAC manufacturers are Mahle GmbH (Germany), Hanon Systems (South Korea), Mitsubishi Heavy Industries Ltd (Japan), Denso Corporation (Japan), Toyota Industries Corporation.
The global automotive manufacturer Hanon Systems announced the acquisition of the condenser sector of Keihin Corporation in May of 2021 for operations across North America and Europe.
Johnson electric’s sales for the quarter that ended in June 2021 was $877 million as compared to the company’s sales of $517 million for the same quarter during 2020.
Denso, automotive component manufacturer based in Japan, closed their fiscal year in March 2021 with a consolidated total revenue of $44.6 billion which was a 4% decrease from the year 2018-2019. They had an operating profit of $1.4 billion, a 153.9% increment from the previous year.
- The Japan sector reported an increase in sales primarily for Toyota Motor Corp. however, the revenue decreased by 2.7% to a total of $28.7 billion.
- In the North American region, the revenue decreased by 12.8% to $9.3 billion from the previous year.
- In Europe, the revenue decreased by 10.9% to $11.8 billion in comparison with the previous year.
- In the Asia-Pacific region, the sales and revenue increased due to China led Sales by 2% to $11.8 billion from the previous year.
Denso Corporation’s consolidated revenue at the end of FY-2019 was $47.6 Billion 3.9% decrease Y-o-Y and the operating profit was $563.8 Million 80% decrease from previous year
Denso’s 1st Quarter revenue ending June 2020 was $ 7.1 Billion a 42% decrease from previous year and the operating loss was $989.6 Million.Thermal systems accounted for $13.2 Billion revenue out of $47.6 Billion in the FY2019. The figure was $13.5 Billion in FY-2018
MAHLE GmBh, automotive parts supplier based in Germany reported a decrease in sales in the 2020 to EUR 9,774 million from the year 2019 which recorded sales of EUR 12,049 million. However, they maintained group-wide research and developmental activities at a high level with investments worth EUR 644 million. The company reduced their net debt by EUR 400 million.
Among the leading compressor manufacturers, Toyota Industry corporation is now planning to expand the manufacturing of electric compressors outside Japan. In Chinese province of Jiangsu the production was to commence by March 2020, but now likely to have been postponed due to COVID-19 outbreak.
- In Shandong, another Chinese province the production is expected to commence by June 2021. The target annual production of 400, 000 units of electric compressors of ESB27 and ES20 models are expected to be achieved in each of the 2 plants.
Mahle-Behr is a leading Euroepan HVAC manufacturer.The activities at R&D centres of conventional air conditioning compressors plant in Luxembourg is proposed to be ceased by mid-2021, as the focus on product development of electric compressor is looming large.
MAHLE developed an air-conditioned child’s car seat in collaboration with a leading manufacturer in the sector. The product is expected to be available from specialist retailers in 2020. The Thermal Management segment accounted for $5.45 Billion revenue out of $14 Billion revenue in 2019
Hanon Systems invested ~380 Million USD on the automotive AC sector of the company on installment and expansion of new facilities. Operating profit of Hanon Systems in 2019 was ~$ 362 M and in Q1 2020 it was $50.2 M loss of 36.1% Y-o-Y. Hanon System produces about 1.28 M HVAC units across the world with productions in Asia accounting for almost 50%. HVAC units’ operating ratio was 73% in Asia highest for any region, the company is capable of producing 1.8 M units globally.
Operating Profit of Keihin Systems for the FY 2019 ended March 2019 was $236 Million, and the value and at the end of 9 month period in Dec 2019 the operating profit was $90.4 Million