US HVAC Market Forecasts by Product, Energy Source, Market and Region

Replacement of Aging Equipment to Remain the Key Driver of Growth

The majority of expected demand increases will come from ongoing replacement of existing equipment that has reached the end of its operational lifespan with better performing, and typically higher value, equipment. Shifts in the product mix toward more expensive HVAC equipment -- such as away from room air conditioners to unitary air conditioners and from noncondensing cast iron boilers to condensing steel boilers -- will provide further impetus to dollar gains.

Key Findings in US HVAC Market Forecasts:

Air Conditioning Equipment to Continue to Account for the Largest Share of Demand

Air conditioning equipment is expected to remain the leading product type in value terms in 2021. The relatively higher price of air conditioning equipment and a substantial replacement market is responsible for the equipment’s large market size. Through 2021, sales advances for air conditioning equipment will approximate the average for HVAC equipment overall.

Heating Equipment to Post the Fastest Increases of Any Product Type

Sales growth for heating equipment, which represents the second leading HVAC equipment product type, will outpace growth for all other product categories through 2021. Rising demand for better performing and higher value equipment will drive advances. In addition, the need to promptly replace heating equipment upon unit failure supports overall equipment sales levels.

Residential Market to Remain the Faster Growing

The residential market for HVAC equipment is expected to outperform the commercial market through 2021. Ongoing replacement activity will remain the key factor boosting equipment sales. Continued strength in the construction of new housing units will also have a positive impact on demand, as will the larger size of the installed equipment base from earlier home construction spending.

However, the residential market will remain the smaller market overall due to the higher heating and cooling requirements of larger commercial buildings, which typically results in the use of more expensive units and the installation of more than one unit in many commercial facilities.

The South Will Remain the Largest Market

The South accounts for the largest share of US HVAC equipment demand in any given year, with regional sales accounting for 40% of total sales in 2016. The South has the largest population and building stock of any region, resulting in a substantial replacement market that supports overall HVAC equipment sales. Through 2021, the South and West are forecast to experience the strongest gains in sales in percentage terms, a byproduct of the regions’ large and growing populations and building stocks.

Study Coverage

This industry study presents historical demand data (2006, 2011, and 2016) and forecasts (2021) by product type (air conditioning equipment, dehumidifiers & humidifiers, heat pumps, and heating equipment), energy source (electricity, natural gas, heating oil and other), market (commercial and residential), and US region (Midwest, South, Northeast, and West). Demand is presented in both dollars and units. The study also evaluates company market share and provides a competitive analysis of leading manufacturers, including Daikin Industries, Ingersoll-Rand, Johnson Controls, Lennox, LG Electronics, Nortek, Rheem, SPX, and United Technologies.

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Table of Contents

EXECUTIVE SUMMARY

OVERVIEW

Key Findings

Factors Influencing HVAC Equipment Demand

Energy Profile

Energy Efficiency

Impact of Tax Credits on HVAC Equipment Demand

Refrigerant Regulations

Pricing Trends

Market Volatility

US Production & Foreign Trade

US Production & Foreign Trade Overview

Imports

Exports

PRODUCTS

Key Findings

Demand Forecast by Product Type

HVAC Equipment Forecast Overview

Air Conditioning Equipment

Heating Equipment

Heat Pumps

Dehumidifiers & Humidifiers

Demand Forecast by Energy Source

Demand Forecast in Units

HVAC Equipment Forecast Overview

Air Conditioning Equipment

Heating Equipment

Heat Pumps

Dehumidifiers & Humidifiers

Production Forecasts by Type

MARKETS

Key Findings

Demand Forecast by Market

HVAC Equipment Markets Overview

Commercial

HVAC Equipment Overview

Demand Forecast by Building Type

Demand Forecast by HVAC Equipment Product Type

Residential

HVAC Equipment Overview

Demand Forecast by Building Type

Demand Forecast by HVAC Equipment Product Type

REGIONS

Key Findings

HVAC Equipment Demand by Region

Regional Overview

Northeast

Regional Overview

Demand Forecast by Market

Demand Forecast by Product Type

Midwest

Regional Overview

Demand Forecast by Market

Demand Forecast by Product Type

South

Regional Overview

Demand Forecast by Market

Demand Forecast by Product Type

West

Regional Overview

Demand Forecast by Market

Demand Forecast by Product Type

INDUSTRY STRUCTURE

Key Findings & Industry Composition

Market Share

HVAC Equipment Market Leaders

Other HVAC Equipment Suppliers

Competitive Strategies

Product Development & Manufacturing

Marketing

Distribution

Cooperative Agreements

Mergers, Acquisitions, & Industry Restructuring

List of Industry Participants

APPENDIX

Scope

Methodology

Sources

Associations & Agencies

Related Freedonia Group Studies

Definitions

Abbreviations

Climate Zones

Macroeconomic Assumptions

Economic Environment

Demographic Trends

Consumer Spending

Building Construction

Residential Building Construction

New Housing

Housing Stock

Improvements & Repairs

Nonresidential Building Construction

List of Tables

OVERVIEW

Table 2-1 | Average Retail Energy Costs in the US by Source, 2006 - 2021 ($/mil Btu)

Table 2-2 | HVAC Equipment Pricing Trends, 2006 - 2021 (dollars/unit)

Table 2-3 | Foreign Trade in HVAC Equipment, 2006 - 2021 (million dollars)

Table 2-4 | HVAC Equipment Imports by Source, 2006 - 2016 (million dollars)

Table 2-5 | HVAC Equipment Exports by Destination, 2006 - 2016 (million dollars)

PRODUCTS

Table 3-1 | HVAC Equipment Demand by Product Type, 2006 - 2021 (million dollars)

Table 3-2 | HVAC Equipment Demand by Energy Source, 2006 - 2021 (million dollars)

Table 3-3 | HVAC Equipment Demand by Volume, 2006 - 2021 (000 units)

Table 3-4 | HVAC Equipment Shipments by Product Type, 2006 - 2021 (million dollars)

MARKETS

Table 4-1 | HVAC Equipment Demand by Market, 2006 - 2021 (million dollars)

Table 4-2 | Commercial HVAC Equipment Demand, 2006 - 2021 (million dollars)

Table 4-3 | Commercial HVAC Equipment Demand by Building Type, 2006 - 2021 (million dollars)

Table 4-4 | Commercial HVAC Equipment Demand by Product Type, 2006 - 2021 (million dollars)

Table 4-5 | Residential HVAC Equipment Demand, 2006 - 2021 (million dollars)

Table 4-6 | Residential HVAC Equipment Demand by Building Type, 2006 - 2021 (million dollars)

Table 4-7 | Residential HVAC Equipment Demand by Product Type, 2006 - 2021 (million dollars)

REGIONS

Table 5-1 | HVAC Equipment Demand by Region, 2006 - 2021 (million dollars)

Table 5-2 | Northeast: HVAC Equipment Demand by Market, 2006 - 2021 (million dollars)

Table 5-3 | Northeast: HVAC Equipment Demand by Product Type, 2006 - 2021 (million dollars)

Table 5-4 | Midwest: HVAC Equipment Demand by Market, 2006 - 2021 (million dollars)

Table 5-5 | Midwest: HVAC Equipment Demand by Product Type, 2006 - 2021 (million dollars)

Table 5-6 | South: HVAC Equipment Demand by Market, 2006 - 2021 (million dollars)

Table 5-7 | South: HVAC Equipment Demand by Product Type, 2006 - 2021 (million dollars)

Table 5-8 | West: HVAC Equipment Demand by Market, 2006 - 2021 (million dollars)

Table 5-9 | West: HVAC Equipment Demand by Product Type, 2006 - 2021 (million dollars)

INDUSTRY STRUCTURE

Table 6-1 | HVAC Equipment Sales by Company, 2016 (million dollars)

Table 6-2 | R&D Spending for Selected HVAC Equipment Companies, 2016 (million dollars)

Table 6-3 | Selected Cooperative Agreements

Table 6-4 | Selected Acquisitions & Divestitures

APPENDIX

Table 7-1 | Study Scope: Air Conditioning Equipment Markets

Table 7-2 | Study Scope: US Regions

Table 7-3 | Relevant NAICS Codes (2012)

Table 7-4 | Abbreviations & Acronyms Used in Study

Table 7-5 | Macroeconomic Indicators, 2006 - 2021 (billion 2009 dollars)

Table 7-6 | Population & Households, 2006 - 2021 (million persons)

Table 7-7 | Personal Consumption Expenditures, 2006 - 2021 (billion dollars)

Table 7-8 | Building Construction Expenditures, 2006 - 2021 (billion dollars)

Table 7-9 | Residential Building Construction, 2006 - 2021 (billion dollars)

Table 7-10 | New Housing Indicators, 2006 - 2021 (thousand units)

Table 7-11 | Housing Stock by Type, 2006 - 2021 (million units)

Table 7-12 | Residential Improvement & Repair Expenditures, 2006 - 2021 (billion dollars)

Table 7-13 | Nonresidential Building Construction Expenditures, 2006 - 2021 (billion dollars)

List of Charts

EXECUTIVE SUMMARY

Figure 1-1 | Key Trends in the US Market for HVAC Equipment

OVERVIEW

Figure 2-1 | Key Trends in the US HVAC Equipment Market

Figure 2-2 | HVAC Equipment Picing Trends, 2006 - 2021 (annual percent change)

Figure 2-3 | HVAC Equipment Demand, 2006 - 2016 (million dollars)

Figure 2-4 | US Foreign Trade in HVAC Equipment, 2006 - 2016 (million dollars)

Figure 2-5 | HVAC Equipment Imports by Source, 2006 - 2016 (million dollars)

Figure 2-6 | HVAC Equipment Exports by Destination, 2006 - 2016 (million dollars)

PRODUCTS

Figure 3-1 | Key Trends in US HVAC Equipment Products

Figure 3-2 | HVAC Equipment Demand, 2006 - 2021 (percent annual change)

Figure 3-3 | Key Trends in Air Conditioning Equipment

Figure 3-4 | Key Trends in Heating Equipment

Figure 3-5 | Key Trends in Heat Pumps

Figure 3-6 | Key Trends in Dehumidifiers & Humidifiers

Figure 3-7 | HVAC Equipment Demand by Value & Volume, 2016 (percent of total)

Figure 3-8 | HVAC Equipment Shipments by Product Type, 2016 (billion dollars)

MARKETS

Figure 4-1 | Key Trends in US HVAC Equipment Markets

Figure 4-2 | HVAC Equipment Demand by Market, 2006 - 2021 (percent of total)

Figure 4-3 | Commercial HVAC Equipment Demand, 2006 - 2016 (million dollars)

Figure 4-4 | Commercial HVAC Equipment Demand by Building Type, 2016 (billion dollars)

Figure 4-5 | Commercial HVAC Equipment Demand by Product Type, 2016 (billion dollars)

Figure 4-6 | Residential HVAC Equipment Demand, 2006 - 2016 (million dollars)

Figure 4-7 | Residential HVAC Equipment Demand by Building Type, 2006 - 2021 (million dollars)

Figure 4-8 | Residential HVAC Equipment Demand by Product Type, 2016 (billion dollars)

REGIONS

Figure 5-1 | Key Trends in US HVAC Equipment Regions

Figure 5-2 | HVAC Equipment Demand by Region, 2016 (billion dollars)

Figure 5-3 | Northeast: Market Position

Figure 5-4 | Northeast: HVAC Equipment Demand by Product Type, 2016 (billion dollars)

Figure 5-5 | Midwest: Market Position

Figure 5-6 | Midwest: HVAC Equipment Demand by Product Type, 2016 (billion dollars)

Figure 5-7 | South: Market Position

Figure 5-8 | South: HVAC Equipment Demand by Product Type, 2016 (billion dollars)

Figure 5-9 | West: Market Position

Figure 5-10 | West: HVAC Equipment Demand by Product Type, 2016 (billion dollars)

INDUSTRY STRUCTURE

Figure 6-1 | US HVAC Equipment Market Share, 2016 (billion dollars)

Figure 6-2 | HVAC Equipment: Leading Supplier

Figure 6-3 | HVAC Equipment: Second Leading Supplier

Figure 6-4 | HVAC Equipment: Third Leading Supplier

Figure 6-5 | HVAC Equipment: Fourth Leading Supplier

APPENDIX

Figure 7-1 | Continental US Climate Zones

Figure 7-2 | Annual Growth in Real GDP, 2000 - 2016, Compared to 1980 - 2005 Average (percent)

Figure 7-3 | Annual Population Growth, 2001 - 2016 (percent)

Figure 7-4 | Housing Stock by Year of Construction, 2016 (percent)

US HVAC Market Forecasts by Product, Energy Source, Market and Region

Key Findings in US HVAC Market Forecasts:

Air Conditioning Equipment to Continue to Account for the Largest Share of Demand

Heating Equipment to Post the Fastest Increases of Any Product Type

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