HVAC Equipment Market

Market Definition

The market involves heating, ventilation, and air conditioning systems used to regulate indoor environments across residential, commercial, and industrial sectors. It encompasses the manufacturing, distribution, and installation of systems that ensure thermal comfort and air quality. 

The report examines critical driving factors, industry trends, regional developments, and regulatory frameworks impacting market growth through the projection period.

HVAC Equipment Market Overview

The global HVAC equipment market size was valued at USD 97.63 billion in 2023 and is projected to grow from USD 104.52 billion in 2024 to USD 177.96 billion by 2031, exhibiting a CAGR of 7.90% during the forecast period. 

This robust growth is driven by rising global temperatures, increasing urbanization, and a surge in residential and commercial construction projects. Growing awareness of indoor air quality and the need for energy-efficient climate control solutions are propelling demand across both developed and emerging economies. Technological advancements such as smart HVAC systems, integration with IoT, and automation are further enhancing system performance and appeal.

Major companies operating in the HVAC equipment industry are DAIKIN INDUSTRIES, Ltd., Carrier, Trane, Lennox International Inc., Rheem Manufacturing, Mitsubishi Group, Johnson Controls, FUJITSU GENERAL, Robert Bosch GmbH, Whirlpool Corporation, Panasonic Corporation, Samsung Electronics, LG Electronics, Emerson Electric Co., and Danfoss.

Government regulations promoting green buildings and energy conservation are leading to the widespread adoption of advanced HVAC systems with lower environmental impact. Additionally, the expansion of industrial infrastructure and the rising popularity of centralized systems in large facilities are boosting market penetration. 

Retrofits and system upgrades in aging infrastructure are further contributing to revenue growth. With consumers prioritizing comfort, health, and sustainability, the market is likely to witness notable expansion in the coming years.

• In November 2024, Copeland and Daikin announced a joint venture to introduce Daikin’s inverter swing rotary compressor technology to the U.S. residential segment. The collaboration aims to offer energy-efficient, low-GWP, and high-performance compressor solutions tailored for residential applications. This strategic move supports the growing demand for decarbonization and electrification in heating systems, while also expanding Copeland’s product portfolio.

Key Highlights:

1. The HVAC equipment industry size was valued at USD 97.63 billion in 2023.
2. The market is projected to grow at a CAGR of 7.90% from 2024 to 2031.
3. Asia Pacific held a share of 33.82% in 2023, valued at USD 33.02 billion.
4. The heating segment garnered USD 30.07 billion in revenue in 2023.
5. The residential segment is expected to reach USD 71.27 billion by 2031.
6. The market in North America is anticipated to grow at a CAGR of 8.40% over the forecast period.

Market Driver

Climate Change and Demand for Energy-Efficient Solutions

The market is experiencing significant growth, mainly due to increasing climate volatility and the global shift toward energy efficiency. As extreme weather events such as heatwaves, cold snaps, and temperature fluctuations are fueling demand for HVAC systems that ensure year-round indoor safety and comfort. 

Traditional systems are proving less reliable in certain regions, highlghting the need for more resilient and adaptive technologies capable of operating efficiently under unpredictable conditions. Moreover, there is a rising emphasis on energy-efficient systems across residential, commercial, and industrial sectors.

Governments worldwide are enforcing stricter building codes and environmental regulations to reduce energy consumption and greenhouse gas emissions. In response, end-users are prioritizing HVAC equipment that offers high performance, energy-efficient HVAC systems to ensure compliance and reduce operational costs. 

Technologies such as variable refrigerant flow systems, smart controls, and inverter-based compressors are gaining traction, aligning with both regulatory goals and growing demand for sustainable solutions.

• In December 2024, SUNON Group's TUMÄ brand launched new DC motor-driven ventilation products, including the FLOW2ONE PLUS 2-way air exchanger with HEPA and PM2.5 sensors and a filter-type cassette ventilation fan for toilet exhaust. These products offer quiet, energy-efficient solutions designed to improve indoor air quality and support energy conservation in residential, hotel, and commercial building applications.

Market Challenge

Adapting HVAC Systems to Environmental Standards

A critical challenge hampering the expansion of the HVAC equipment market is the transition to low-global-warming-potential (GWP) refrigerants, supported by evolving environmental regulations and international climate agreements.  Traditional refrigerants, valued for efficiency and reliability, are being phased out due to their high global warming impact. 

This shift is placing operational and compliance pressures on the industry, requiring manufacturers to redesign equipment, modify production processes, and ensure compatibility with next-generation refrigerants, while balancing performance, safety, cost, and regulatory requirements.

New refrigerants often present challenges such as higher flammability and different pressure-temperature characteristics, necessitating changes in system design, technician training, and maintenance protocols. To mitigate this challenge, HVAC companies are investing in R&D to develop systems optimized for low-GWP refrigerants while maintaining efficiency and safety standards. 

Moreover, industry initiatives are focused on upskilling technicians and updating servicing guidelines to support the safe adoption of environmentally compliant refrigerant.

Market Trend

Adoption of Smart Connectivity and Demand for Modular Scalability

The market is witnessing significant growth due to the adoption of smart and connected systems and the rise of modular and scalable solutions tailored for dynamic spaces. With the growing influence of IoT and advanced data analytics, smart HVAC systems are gaining traction for their ability to optimize energy consumption, enable remote monitoring, and provide predictive maintenance insights. 

These systems enhance user comfort while reducing operational inefficiencies, aligning with broader trends toward automation and intelligent building management. Additionally, the demand for modular and scalable HVAC solutions is rising due to the increasing prevalence of flexible and multi-use spaces.

From commercial buildings with varying occupancy to adaptable residential layouts, end-users are seeking equipment that can be easily configured or expanded without major system overhauls. 

Modular HVAC systems allow for greater design flexibility, ease of installation, and improved cost control, making them a preferred choice for evolving infrastructure needs. This reflect a broader shift toward smarter, more adaptable HVAC ecosystems that adapt in real-time to environmental conditions and user demands.

• In March 2025, Trane Technologies introduced enhanced Modular Self-Contained (MSC) HVAC units designed to simplify installation and boost building performance. The updated MSC units, featuring modular design, variable-speed compressors, and the Symbio 500 unit controller, offer up to 30% improved full load efficiency and quieter operation.

HVAC Equipment Market Report Snapshot

Segmentation	Details
By Product	Heating, Ventilation, Cooling
By End Use	Residential, Commercial, Industrial
By Region	North America: U.S., Canada, Mexico
	Europe: France, UK, Spain, Germany, Italy, Russia, Rest of Europe
	Asia-Pacific: China, Japan, India, Australia, ASEAN, South Korea, Rest of Asia-Pacific
	Middle East & Africa: Turkey, U.A.E., Saudi Arabia, South Africa, Rest of Middle East & Africa
	South America: Brazil, Argentina, Rest of South America

Market Segmentation

• By Product (Heating, Ventilation, and Cooling): The heating segment earned USD 30.07 billion in 2023 due to increased demand for space heating in colder regions and the replacement of outdated systems with energy-efficient units.
• By End Use (Residential, Commercial, and Industrial): The residential segment held a share of 40.47% in 2023, attributed to rapid urbanization, rising disposable incomes, and growing awareness of indoor air comfort among homeowners.

HVAC Equipment Market Regional Analysis

Based on region, the market has been classified into North America, Europe, Asia Pacific, Middle East & Africa, and Latin America.

Asia Pacific HVAC equipment market accounted for a substantial share of 33.82% in 2023, valued at USD 33.02 billion. This dominance is primarily attributed to rapid urban development, rising middle-class populations, and increasing investments in residential and commercial infrastructure, particularly in China, India, and Southeast Asian nations. 

The expansion of the manufacturing sector and the construction of large-scale industrial complexes in China and India have further boosted demand for high-capacity HVAC systems. 

Additionally, growing demand for air conditioning in urban households across tropical countries, such as Indonesia, Vietnam, and the Philippines, driven by rising temperatures and improving living standards, has accelerated regional market growth. Technological advancements and the presence of regional manufacturers offering cost-effective systems further contribute to this growth.

• In April 2025, LG Electronics supplied its state-of-the-art Multi V i variable refrigerant flow system. equipped with an AI engine, to a new logistics center in Singapore. The project underscores LG’s commitment to expanding its heating  HVAC business in Southeast Asia.

North America HVAC equipment industry is expected to register the fastest CAGR of 8.40% over the forecast period. This growth is bolstered by rising consumer demand for smart and connected HVAC systems, particularly in the U.S., where home automation is rapidly gaining traction. 

The need to upgrade aging HVAC infrastructure in older residential and commercial buildings in cities such as New York, Chicago, and Toronto is fueling replacement demand. Additionally, Year-round demand is further supported by extreme weather conditions, ranging from cold Canadian winters to hot, humid southern U.S. summers. The regional market further benefits from a strong presence of leading HVAC manufacturers and a tech-savvy consumer base, propelling innovation and expansion.

Regulatory Frameworks

• In the United States, HVAC equipment is regulated by the U.S. Department of Energy (DOE)  under the Energy Policy and Conservation Act (EPCA), and by the Environmental Protection Agency (EPA) under the Clean Air Act for refrigerant use and emissions.
• In the European Union, HVAC systems must comply with the EcoDesign Directive (2009/125/EC) and Energy Labelling Regulation (EU) 2017/1369, which set minimum energy performance standards and labeling requirements, while refrigerant use is governed by the F-gas Regulation (EU) No 517/2014.
• In China, HVAC products are subject to energy efficiency and environmental standards set by the China Energy Label (CEL) system and regulated by the Ministry of Industry and Information Technology (MIIT) and the State Administration for Market Regulation (SAMR) under GB (Guobiao) standards.
• In Japan, HVAC systems are regulated under the Top Runner Program under the Energy Conservation Act, enforced by the Ministry of Economy, Trade and Industry (METI), and must comply with JIS (Japanese Industrial Standards) for performance and safety.

Competitive Landscape

The HVAC equipment market is characterized by continuous innovation, with key players striving to strengthen their market positions through a range of strategic initiatives. Companies are heavily investing in research and development to introduce advanced, energy-efficient, and smart HVAC systems integrated with IoT and AI capabilities. 

Product differentiation through technological innovation, such as variable refrigerant flow systems and intelligent climate control, is a common strategy to cater to diverse customer needs.

Strategic collaborations, joint ventures, and partnerships with construction firms, real estate developers, and smart home technology providers are increasingly being employed to expand market reach and enhance distribution networks. Several companies are scaling up manufacturing and service operations in high-growth regions, particularly in Asia Pacific and the Middle East, to leverage cost advantages and meet rising local demand. 

In addition, companies are adopting aggressive pricing strategies and offering customized solutions to gain a competitive edge in both residential and commercial segments. After-sales services, maintenance packages, and digital monitoring platforms are being integrated to improve customer retention and create long-term value. 

Acquisitions of niche players and startups with specialized technologies are also being adopted to accelerate innovation and strengthen product portfolios.

• In August 2024, Carrier and Sibi announced their collaboration to revolutionize HVAC supply chain management for home builders. The partnership integrates Sibi’s technology platform with Carrier’s distribution network, enabling streamlined order placement and expanding Carrier’s reach into the Single-Family Rental, Multi-Family Rental, Home Warranty, and New Construction sectors.

List of Key Companies in HVAC Equipment Market:

• DAIKIN INDUSTRIES, Ltd.
• Carrier
• Trane
• Lennox International Inc.
• Rheem Manufacturing
• Mitsubishi Group
• Johnson Controls
• FUJITSU GENERAL
• Robert Bosch GmbH
• Whirlpool Corporation
• Panasonic Corporation
• Samsung Electronics
• LG Electronics
• Emerson Electric Co.
• Danfoss

Recent Developments (Acquisitions/New Product Launch)

• In February 2025, LG Electronics showcased its latest HVAC technologies at AHR Expo 2025 in Orlando, including high-efficiency inverter heat pumps, the upgraded Multi V i VRF system, and the new Oil-Free Inverter Centrifugal Chiller. The company also introduced advanced compressors and motors.
• In January 2025, Panasonic Corporation launched its OASYS Residential Central Air Conditioning System in the U.S. market. The system, comprising a Mini Split AC, Energy Recovery Ventilator (ERV), and DC motor-driven transfer fans, is designed to reduce energy consumption for heating and air conditioning by over 50% compared to conventional systems, while providing air purification, consistent temperature control, and whisper-quiet operation.
• In January 2025, Sojitz Corporation announced the acquisition of a 70% stake in Climatech Group Holdings Pty Ltd., an energy-efficient HVAC provider and mechanical service contractor in Australia, through its subsidiary Ellis Air Group Pty Ltd.
• In July 2024, Bosch Group acquired the residential and light commercial HVAC business from Johnson Controls, including full ownership of the Johnson Controls-Hitachi (JCH) joint venture. The USD 8 billion transaction is intended to expand Bosch’s footprint in the U.S. and Asia.