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China witnessed annual sales of 21.4 Million passenger vehicles in 2019. China also accounted for highest number of EVs and PHEVs for any region in the world, this has boosted the market value of the HVAC system in the country.
The COVID-19 outbreak is estimated to reduce the passenger vehicle sales by at least 19%. In H1-2020, the BEVs and PHEVs sold saw a 35% decline in sales Y-o-Y. The market in China is slowly stabilizing, reopening of manufacturing plants and restart of domestic supply has slowly helped the sector to get back to normal at least at the domestic level.
Sedan and SUVs accounted for almost 92% of the total car sales in the country. Rear AC fitment among the passenger vehicles was 2nd highest in China, after US. Comparatively low pricing of the HVAC content per vehicle has kept the market value at bay despite the large number of car sales.
In 2019, market value of automotive HVAC system in the country was 2nd highest for any region in the world.
Installation of air purifier in the cars is growing significantly and the premium cars are equipped mostly with ‘negative ion generator’ filter. In China 23 out of top 30 selling cars in 2019 are equipped with PM (Particulate Matter) 2.5 filter and Pollen filters.
Automatic HVAC System had around ~61% penetration among the top 30 selling cars in 2019. Top selling Premium cars had much higher penetration for automatic HVAC system. But unlike US and Europe among the premium cars there were few models which equipped manual HVAC system too.
Manual HVAC system was mostly seen in the top selling budget models of VW cars, as most of the variants of its top 3 models were equipped with this system. Among Chinese OEMs Wuling models were mostly equipped with only manual HVAC system.
Among top selling OEMs Honda had the highest penetration for automatic HVAC system in the country followed by Toyota. Even though VW group had less penetration towards automatic HVAC system, it contributed to high penetration of rear ac fitment in the country.
HMI (Human Machine Interface) or the HVAC controller design among the top selling cars is mostly knobs. Haval H6 and Geely Boyue had reinvented the HVAC controls design, even though were still equipped with buttons. The touchscreen HVAC control technology is present in the premium segment cars.
3/4th of the cars equipped with automatic HVAC system were fitted with multi zone climate control. Automatic dual zone climate control was the most popular technology in the region. Among the premium segment cars almost every vehicle with automatic HVAC technology were equipped with the multi zone climate control. The tri and four zone climate control were limited to premium segment cars.
Extension of subsidy for 2 more years from 2020 to 2022 will play a major part in boosting EV sales in the country. Thus, the EV sales will boost the market value of HVAC system as the HVAC price per vehicle is higher in EVs.
The Dual credit policy expected to replace the subsidy policy is estimated as the main driver of Chinese EV sales in the future. The EV sales are expected to make up about 25% of the new car sales in 2025 and the policy is estimated to play a crucial role in this.
The top global automotive HVAC manufacturers are Mahle GmbH (Germany), Hanon Systems (South Korea), Toyota Industries (Japan), Denso Corporation (Japan), Johnson Electric (Hongkong) and Keihin Corporation (Japan).
Major Chinese automotive HVAC manufacturer is Aotecar New Energy Technology. It is the market leader in China with more than 60% share of Chinese market. Shanghai Highly is the market leader in electric compressor for buses and supplies its products to tier-1 suppliers.
