Air Conditioner Market in ASEAN-6, Forecast to 2023

Increasing Urbanization and Rising Demand for Energy-Efficient Air Conditioners

Driving Market Growth

Global Energy & Environment Research Team at Frost & Sullivan

PA7F-19
September 2019
Contents

Section Slide Number

Executive Summary 7
 Executive Summary 8
 Market Engineering Measurements 9
 CEO’s Perspective 11
Market Overview 12
 Definitions 13
 Geographic Segmentation 15
 Key Questions this Study will Answer 16
 Market Segmentation 17
 Market Distribution Channel 18
 Value Chain Analysis 19
Drivers and Restraints—Total Air Conditioner Market 20
 Market Drivers 21
 Drivers Explained 22
 Market Restraints 27
 Restraints Explained 28

PA7F-19 2
Contents (continued)

Section Slide Number

Forecasts and Trends—Total Air Conditioner Market 29
 Market Engineering Measurements 30
 Forecast Assumptions 32
 Revenue Forecast 33
 Revenue Forecast Discussion 34
 Percent Unit Shipment and Revenue by AC Type 35
 Percent Unit Shipment and Revenue Discussion by AC Type 36
 Percent Revenue Forecast by Country 37
 Revenue by Country 38
 Market Revenue Vs. CAGR by Country 39
 Revenue Forecast by Country 40
 Percent Revenue by Vertical Market 41
 Revenue Forecast by Vertical Market 42
 Revenue Forecast Discussion by Vertical Market 43
Market Share and Competitive Analysis—Total Air Conditioner Market 44
 Market Share 45

PA7F-19 3
Contents (continued)

Section Slide Number

 Market Share Analysis 46
 Competitive Environment 47
 Top Competitors—Recent Activity and Market Strategy 48
Growth Opportunities and Companies to Action 50
 Growth Opportunity 1—Sustainable Cooling 51
 Growth Opportunity 2—Air Conditioning-as-a-Service 52
 Strategic Imperatives for Success and Growth 53
Indonesia Analysis 54
 Indonesia—Key Findings 55
 Revenue Forecast 56
 Revenue Forecast Discussion 57
 Market Share Analysis 58
Malaysia Analysis 59
 Malaysia—Key Findings 60
 Revenue Forecast 61
 Revenue Forecast Discussion 62

PA7F-19 4
Contents (continued)

Section Slide Number

 Market Share Analysis 63
Singapore Analysis 64
 Singapore—Key Findings 65
 Revenue Forecast 66
 Revenue Forecast Discussion 67
 Market Share Analysis 68
Thailand Analysis 69
 Thailand—Key Findings 70
 Revenue Forecast 71
 Revenue Forecast Discussion 72
 Market Share Analysis 73
The Philippines Analysis 74
 The Philippines—Key Findings 75
 Revenue Forecast 76
 Revenue Forecast Discussion 77
 Market Share Analysis 78

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Contents (continued)

Section Slide Number

Vietnam Analysis 79
 Vietnam—Key Findings 80
 Revenue Forecast 81
 Revenue Forecast Discussion 82
 Market Share Analysis 83
The Last Word 84
 The Last Word—3 Big Predictions 85
 Legal Disclaimer 86
Appendix 87
 Market Engineering Methodology 88
 Abbreviations and Acronyms Used 89
 List of Exhibits 90

Author: Viswesh Vancheeshwar

PA7F-19 6
 Executive Summary

Return to contents

PA7F-19 7
Executive Summary
The ASEAN-6 air conditioner
market was valued at
$6.11 billion in 2018. This
market is expected to reach
$8.56 billion by 2023.
The residential segment will
continue to drive demand for
new air conditioners, while
within the commercial
segment, office, retail and
hospitality sectors will grow the
fastest.
Inverter-based split air
conditioners will be in demand
in the residential and light
commercial segments, while
chillers and variable refrigerant
flow (VRF) systems will see
higher demand in the large
commercial and industrial
segments.
PA7F-19
Japanese manufacturers
dominate the market. Korean
companies are not far behind,
while Chinese competitors
are also fast growing.
The demand for energy-
efficient air conditioners is
growing at a fast pace. This
demand is expected to rise
further driven by stricter
regulations and increasing
electricity costs.
Indonesia and Vietnam
are the biggest markets
in ASEAN by revenue terms.
They will also be the fastest
growing markets between
2018 and 2023,
led by Vietnam.
Source: Frost & Sullivan
8
Market Engineering Measurements

Total Air Conditioner Market: Market Engineering Measurements, ASEAN-6, 2018

Market Overview
Market Size for
Market Base Year Market
Market Stage Last Year of Study
Revenue Growth Rate
Period

Growth $6,114.4 M $8,561.3 M 5.3%

(2018) (2023)

Compound Annual Customer Price Degree of Market

Growth Rate Sensitivity Technical Change Concentration

7.0% 8 7 68.5%

(market share held by top 5

(CAGR, 2018–2023) (scale:1 [low] to 10 [high]) (scale:1 [low] to 10 [high])
companies)

Decreasing Stable Increasing For a tabular version, click here

Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 9
Market Engineering Measurements (continued)

Competitor Overview Industry Advancement

R&D Spend as a Marketing Spend

Number of Average Product
Percent of Market as a Percent of
Competitors Development Time
Revenue Market Revenue

1.5–2
>25 2.0% 3.0%
Years

(active market competitors in 2018)

Decreasing Stable Increasing

Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 10
CEO’s Perspective

Increasing building construction activity as a

1 result of rapid urbanization is driving the
demand for air conditioners.

Growing preference for inverter air

2 conditioners is forcing manufacturers to
expand their product portfolio.

Demand for energy-efficient air conditioners

3 is expected to burgeon with stricter
regulations and increasing electricity costs.

The residential segment will continue to drive

4 market growth along with the office and retail
sectors in the commercial segment.

With many fast-developing economies and

low air conditioner penetration rates, the
5 ASEAN market presents huge business
potential.
Source: Frost & Sullivan

PA7F-19 11
 Market Overview

Return to contents

PA7F-19 12
Definitions

Market Definition
• An air conditioner (AC) is a device that primarily controls the temperature and humidity
of a particular room/area, typically to provide cool air in hot/warm conditions. It includes the following.
o Room Air Conditioners (RAC): Window type and small-sized split type ACs as well
as residential-use multi systems.
o Packaged Air Conditioners (PAC): Commercial-use medium/large-sized split type ACs, remote
condenser type ACs, and single packaged ACs.
o Variable refrigerant flow systems and chillers.

Scope

Geographic Coverage ASEAN-6

Study Period 2016–2023

Base Year 2018

Forecast Period 2019–2023

Monetary Unit US Dollars

Source: Frost & Sullivan

PA7F-19 13
Definitions (continued)

Vertical Market Definition

• In terms of applications, air conditioners described in this research are used for residential,
commercial, and industrial cooling in buildings.
o Residential: Landed houses, Condominiums, Apartments, etc.
o Commercial: Office, Healthcare, Hospitality, Retail, Education, Government.
o Industrial: Warehouses, Factories and Process Plants.

Revenue Definition
 Revenue is measured in terms of a manufacturer’s earnings from the sale of air conditioners.
 It does not include revenue generated by installation, commissioning, training, or value-added services
from system integrators (SIs) and value-added resellers (VARs).
 All figures represented are in US dollars unless otherwise specified.
 The dollars used are constant US dollars based on the exchange rate in 2018.

Note: Revenue breakdown by application is provided only for commercial segment. Source: Frost & Sullivan

PA7F-19 14
Geographic Segmentation

Geographic Segmentation
The geographic scope of this research covers the following 6 countries in ASEAN.

VIETNAM

THAILAND
THE PHILIPPINES

MALAYSIA SINGAPORE

INDONESIA

Image Source: Flaticon

Source: Frost & Sullivan

PA7F-19 15
Key Questions this Study will Answer

What is the Who is leading What are the Which What are the What are the
current market the market different countries in opportunities impacts of
scenario for air and who are distribution ASEAN have for growth in technological
conditioners in the channels that the potential to this region? development
ASEAN-6? competitors? are present in grow during What could on market
the ASEAN-6 the next five companies do growth?
Is the market Who are the air conditioner years and to capitalize
growing, how different value market? what are the on the growth? What are the
long will it chain regional anticipated
continue to participants, trends? market trends
grow, and at and what are in the future?
what rate? their roles?

Source: Frost & Sullivan

PA7F-19 16
Market Segmentation

Key Takeaway: Indonesia and Vietnam are the two biggest markets by revenue among the ASEAN-6
countries.

Total Air Conditioner Market: Percent Revenue Breakdown by Country, ASEAN-6, 2018

Vietnam
22.2% Indonesia
27.5%

The Philippines
12.2%

Malaysia
13.8%

Thailand Singapore
19.9% 4.4%

Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 17
Market Distribution Channel

Total Air Conditioner Market: Distribution Channel Analysis, ASEAN-6, 2018

Architect/
Product/Service Flow Building
Legend
Influencer Consultant
Key Decision Maker in the AC
procurement process

Developer/ Financial
Project Owner Investor

30.0%
Authorized
50.0% Main
Partner
Contractor
Air Conditioner
OEM

Distributor M&E HVAC System

20.0% Contractor Contractor Integrator

Building
/Facility
Key: OEMs: Original Equipment Manufacturers Manager

Note: System integrators can be third-party service providers or authorized installers of the OEM Source: Frost & Sullivan

PA7F-19 18
Value Chain Analysis
Total Air Conditioner Market: Value Chain Analysis, ASEAN-6, 2018
Architect/Building
Consultant
• Architects/building
consultants provide top-level
advice on overall air
conditioner specifications to
achieve green building ratings
or a certain level of energy
efficiency.
• They review and approve
proposals submitted by the
M&E Contractor, HVAC
Contractor, or the SI.
• They also perform roles
related to installation,
supervision, and quality
monitoring.
Bargaining Power: High Medium
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Developer/Project
Owner
• Project owners determine the
air conditioner vendor’s pre-
qualification criteria such as
technical capabilities and
required project references.
• They provide specific
guidelines on the
specifications and convey
the requirements of the
architect/building consultant
to the main contractor and
then to the sub-contractors
or SIs.
Low
Contractors/SIs
• Contractors/SIs administer the entire
bidding process from the request-for-
proposal (RFP) stage to the final
contract process.
• The procurement method and
commercial terms are determined by
M&E contractors or main contractors
in consultation with project
owners/developers.
• For projects where the project
owners/developers directly purchase
air conditioner equipment from the
OEM, the role of the sub-
contractor/SI is limited to providing
equipment installation services.
• Final approval from project
owners/developers is required before
entering into contracts with vendors.
Source: Frost & Sullivan
19
 Drivers and Restraints—Total Air Conditioner Market

Return to contents

PA7F-19 20
Market Drivers

Total Air Conditioner Market: Key Market Drivers, ASEAN-6, 2019–2023

Drivers 1–2 Years 3–4 Years 5th Year

Increase in construction activities boosts the

H H H
demand for air conditioners

Demand for energy-efficient air conditioners and

H H M
other technological upgrades spurs sales

Poor air quality and hot, humid climatic

conditions increase the demand for air conditioner M M M
systems

Rising purchasing power of end users induces

M M L
demand and revenue growth

Impact Ratings: H = High, M = Medium, L = Low

Source: Frost & Sullivan

PA7F-19 21
Drivers Explained

Increase in Construction Activities Boosts the Demand for Air Conditioners

• Rise in construction activity is a significant contributor to the increase in demand for air conditioners and,
consequently, higher revenues for the air conditioner market. The construction market in ASEAN is
expected to grow by 7.5% annually between 2017 and 2021, much higher than the global average of 3.0%
over the same period. ASEAN, with many fast-developing economies and low air conditioner penetration
rates, presents a huge business potential.

• This growth in the construction market is buoyed by China’s $250 million ‘One Belt One Road’ initiative
and the 5-year plans being drafted by ASEAN countries to build infrastructure.

• Increase in building construction, especially commercial buildings, will directly contribute to the growth of
the air conditioner market, as almost all such buildings use air conditioners. Green buildings that include
smart features to ensure energy efficiency are likely to attract the highest interest.

• Residential construction, which is proliferating due to growing population and increasing urbanization, will
also be a key driver. An increasing number of residential property developers in Southeast Asia are
providing air conditioners as a bundled offering for those purchasing new apartments. In such cases,
developers are trying hard to protect their brand image and avoid any negative impact on sales. Hence,
they prefer to associate with reputed air conditioner manufacturers.

Source: Frost & Sullivan

PA7F-19 22
Drivers Explained (continued)

Demand for Energy-efficient Air Conditioners and Other

Technological Upgrades Spurs Sales

• The last few years have seen an evolution in air conditioning

technology, adding new capabilities mainly related to energy efficiency,
connectivity, and climate control.

• With many governments mandating conservation measures for energy-

intense commercial and industrial users, the demand for energy-
efficient air conditioners will boost market revenues.

• Strong R&D efforts has led to innovations like variable refrigerant

volume (VRV) systems, zoned temperature control, clean air
technologies, smart thermostats and artificial intelligence (AI) powered
air conditioners.

• Customer expectations that air conditioner units should do more than

just regulating temperature and humidity are redefining the
requirements for indoor quality and comfort.

• Innovative models draw customers to replace their old models; this

trend is expected to boost sales of new air conditioner units.
Image Source: Freepik.com Source: Frost & Sullivan

PA7F-19 23
Drivers Explained (continued)

Total Air Conditioner Market: Energy Efficiency Goals, ASEAN-6, 2018

Vietnam
Reduce total commercial energy consumption
Thailand nationwide by 8%-10% , and that by small and medium
Save 25% of the total enterprises by at least 8% by 2030.
energy by 2030, relative to
Business As Usual (BAU). The Philippines
Reduce final energy
consumption by 10% in all
sectors by 2030.
Malaysia
Reduce final energy
Indonesia
consumption in the industrial,
commercial, and residential Reduce final energy
sectors by 10% from 2011 to consumption by 1% per
2030. year from the BAU
scenario until 2025.
Reduce final energy
consumption in the
transportation sector by 1.39
ktoe in 2030 by modal and fuel Singapore
switching from gasoline to
Reduce energy intensity by 20% by 2020 and by 35% by 2030 from the
electric rail transport and
2005 level. Cap carbon dioxide (CO2) emissions from the combustion of fuel at 63
electric vehicles(EVs).
Mt-CO2 in 2020.
Image Source: Flaticon Source: Frost & Sullivan

PA7F-19 24
Drivers Explained (continued)

Poor Air Quality and Hot, Humid Climatic Conditions Increase the Demand for Air Conditioner
Systems

• The ASEAN region has been plagued by issues related to poor air quality. According to a report by UN
Environment, fewer than 8% of people living in Asia breathe ‘clean air’.

• Poor outdoor air quality is forcing more people to take to air conditioning. In their search for good air
quality indoors, more customers are looking for air conditioning systems that include advanced air filtration
capabilities.

• In terms of clean air technology in air conditioners, innovations include air purifiers that remove unhealthy
pathogens like pollen, dust, bacteria, and viruses; air humidifiers that add moisture; UV lights that help
remove harmful microorganisms; and advanced CO monitors that actively monitor the air for dangerous
carbon monoxide levels.

• Southeast Asian countries are now experiencing temperatures hotter than the average. The urban heat
island (UHI) effect, a result of urbanization, is contributing to the rise in temperatures in cities.

• UHI results in thermal discomfort, heat, and deterioration in air quality, as well as causes pollution-related
health issues such as asthma, heat stroke, and lung disease. This drives the need for more innovative,
energy-efficient air conditioners with additional features such as air purifiers and allergen cleaning
capabilities.
Source: UN Environment; Frost & Sullivan

PA7F-19 25
Drivers Explained (continued)

Rising Purchasing Power of End Users Induces Demand and Revenue Growth

• According to IMF, the average GDP per capita for ASEAN is expected to rise from $15,316 in 2019 to
18,447 in 2023, a growth of 20.4%.

• The global economic epicenter has shifted from BRICS to ICASA (India, China, Africa, Southeast Asia),
indicating more development and higher per capita incomes leading to larger disposable incomes.

• Air conditioners have transitioned from being regarded as luxury commodities to necessities. Rising
income levels translate to higher standard of living, indicating more demand for air conditioners.

GDP Per Capita, ASEAN, 2019F and 2023F

80,000 GR = 16.9%
GDP per capita Nominal ($)

70,000
2019
60,000
50,000 2023
40,000
30,000
GR = 27.2%
20,000
GR = 24.2%
GR = 28.9% GR = 36.2%
10,000 GR = 33.2%

0
Singapore Malaysia Thailand Indonesia Philippines Vietnam
Country
Note: F=Forecast Source: IMF; Frost & Sullivan

PA7F-19 26
Market Restraints

Total Air Conditioner Market: Key Market Restraints, ASEAN-6, 2019–2023

Restraints 1–2 Years 3–4 Years 5th Year

Increasing competitive pressure and lower

M M M
margins affect revenues

Long product life restrains new product sales L L L

Impact Ratings: H = High, M = Medium, L = Low

Source: Frost & Sullivan

PA7F-19 27
Restraints Explained

Increasing Competitive Pressure and Lower Margins Affect Revenues

• Fierce competition in the air conditioning market is likely to keep excess returns in
check.
• Demand for constant innovation, in order to brace competition, requires
manufacturers to constantly innovate in terms of technology and products, thereby
adding to their operational pressures.
• The entry of low-cost air conditioners mainly from China has challenged the
growth of incumbents.
• However, with growing awareness about energy-efficient air conditioners, the sale
of low-cost alternatives from China is expected to decline in the coming years.

Long Product Life Restrains New Product Sales

• The average life of an air conditioner is 10 to 15 years.

• Most customers tend to repair old air conditioners and delay the purchase of new
equipment due to the high initial costs.
• Such long product life results in low replacement rates and restrains the sale of
new air conditioners.

Image Source: Freepik.com Source: Frost & Sullivan

PA7F-19 28
 Forecasts and Trends—Total Air Conditioner Market

Return to contents

PA7F-19 29
Market Engineering Measurements

Total Air Conditioner Market: Market Engineering Measurements, ASEAN-6, 2018

Market Overview

Measurement Name Measurement Trend

Market stage (nascent, growth, mature) Growth –

Market revenue (2018) $6,114.4 M ▲

Market size for last year of study period (2023) $8,561.3 M ▲

Base year market growth rate 5.3% ▲

Compound annual growth rate (CAGR, 2018–2023) 7.0% –

Customer price sensitivity (scale of 1 to 10, low to high) 8 ▲

Degree of technical change (scale of 1 to 10, low to high) 7 ▲

Market concentration (% of base year market controlled by top five

68.5% ▼
competitors)

Decreasing Stable Increasing

Trend
▼ ● ▲
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 30
Market Engineering Measurements (continued)

Competitor Overview

Measurement Name Measurement Trend

Number of Competitors >25 ▲

Industry Advancement

Average product development time 1.5–2 Years ▼

R&D spend by product as a percent of market revenue 2.0% ▲

Marketing spend as a percent of market revenue 3.0% ▲

Decreasing Stable Increasing

Trend
▼ ● ▲
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 31
Forecast Assumptions

• The market size is based on the selling price and revenue from manufacturers to distributors,
retailers, or end users.

• Price sensitivity among consumers is assumed to be constant throughout the forecast period.

• Electricity prices will not reduce drastically during the forecast period.

• Revenue growth is calculated considering the inflation rate and economic growth, while excluding
natural disasters and unpredictable economic conditions.

• The political situation will remain stable during the forecast period.

• Fast-growing economies will not mature before 2023.

• The global economy will remain stable and not encounter a major recession during the period of this
study.

Source: Frost & Sullivan

PA7F-19 32
Revenue Forecast

Key Takeaway: Increasing urbanization and the demand for energy-efficient air conditioners will
boost the growth of this market.

Total Air Conditioner Market: Revenue Forecast, ASEAN-6, 2016–2023

9,000.0
Revenue CAGR, 2018–2023 = 7.0% 9.0

8,000.0 8.0

7,000.0 7.0
Revenue ($ Million)

Growth Rate (%)

6,000.0 6.0

5,000.0 5.0

4,000.0 4.0

3,000.0 3.0

2,000.0 2.0

1,000.0 1.0

0.0 0.0
2016 2017 2018 2019 2020 2021 2022 2023
Revenue 5,533.7 5,807.2 6,114.4 6,468.9 6,877.9 7,354.7 7,911.4 8,561.3
Growth Rate - 4.9 5.3 5.8 6.3 6.9 7.6 8.2
Year
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 33
Revenue Forecast Discussion

ASEAN, with its humid climatic conditions coupled with a growing urban population, witnesses
strong demand for air conditioners. The air conditioner market in the region is in its growth stage.
It was worth $6,114.4 million in 2018.

Rise in building construction activities in the retail, hospitality and office sectors is creating more
demand for air conditioners in the Southeast Asian region. The overall AC penetration is still low,
indicating opportunities for market growth.

Indonesia and Vietnam contribute almost half of the market revenues in ASEAN. Split type air
conditioners are the most popular, especially in the residential and light commercial segments.

With increasing prominence of green buildings, smart buildings, and smart cities, the demand for
energy-efficient air conditioners is expected to grow further in the ASEAN region.

Demand for chillers/VRF systems, especially in the large commercial and industrial sectors, is
expected to increase significantly in the coming years.

The air conditioner market is expected to register a CAGR of 7.0% from 2018 to 2023 and reach
$8,561.3 million in 2023.

Source: Frost & Sullivan

PA7F-19 34
Percent Unit Shipment and Revenue by AC Type

Key Takeaway: Residential air conditioners dominate the market both in terms of units and revenue.

Total Air Conditioner Market: Percent Unit Total Air Conditioner Market: Percent
Shipment by AC Type, ASEAN-6, 2018 Revenue by AC Type, ASEAN-6, 2018

VRF
PAC 1.3% VRF
8.8% 18.3%

PAC
6.6%

RAC
75.2%
RAC
89.9%

Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 35
Percent Unit Shipment and Revenue Discussion by AC Type

• The air conditioning market in ASEAN is dominated by RACs both in terms of units and revenues.
Being a fast-developing region, ASEAN is witnessing increasing urbanization year after year.
Increasing residential construction activity is contributing to a strong demand for room air
conditioners. This demand is further fueled by the hot and humid climatic conditions prevailing in the
region.

• Within the RAC segment, split-type air conditioner units with inverters are growing in prominence as
electricity costs shoot up and as the awareness about energy efficiency and conservation increases.

• Window air conditioners are almost phased out in Southeast Asia, with the exception of the
Philippines. Sales of new window air conditioner units will probably be driven only by the replacement
of similar old units.

• The PAC segment is in a mature stage. PACs are mainly used in mid-sized commercial buildings and
the retail sector. However, the advent of VRF systems is affecting these products’ market share.

• VRF systems are gaining market share primarily in the commercial segment, owing to their energy
efficiency and environment-friendly design. The chillers segment is in the growth stage. Demand for
energy-efficient chillers, such as centrifugal and scrolls, is expected to increase in the coming years.

Source: Frost & Sullivan

PA7F-19 36
Percent Revenue Forecast by Country

Key Takeaway: Indonesia is the largest market in terms of revenue and units. It is expected to
dominate the market throughout the forecasted period.

Total Air Conditioner Market: Percent Revenue Forecast by Country, ASEAN-6, 2016–2023
100.0

80.0
Revenue (%)

60.0

40.0

20.0

0.0
2016 2017 2018 2019 2020 2021 2022 2023
Singapore 4.5 4.4 4.4 4.3 4.2 4.1 4.0 3.9
The Philippines 12.3 12.3 12.2 12.2 12.1 12.1 12.0 11.9
Malaysia 13.8 13.8 13.8 13.8 13.7 13.7 13.6 13.6
Thailand 19.9 19.9 19.9 19.8 19.8 19.7 19.6 19.5
Vietnam 22.0 22.1 22.2 22.4 22.5 22.7 22.9 23.1
Indonesia 27.5 27.5 27.5 27.6 27.7 27.8 27.9 28.0
Year
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 37
Revenue by Country

Key Takeaway: Indonesia and Vietnam accounted for 49.7% of the market revenue in ASEAN in 2018.

Total Air Conditioner Market: Revenue by Country, ASEAN-6, 2018

$6,114.4 M
1,800.0 1,683.7
1,600.0
1,359.3
1,400.0
Revenue ($ Million)

1,215.7
1,200.0
1,000.0
843.3
800.0 746.4

600.0
400.0 266.0
200.0
0.0
Indonesia Malaysia Singapore Thailand The Vietnam
Philippines
Country
ASEAN-6

Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 38
Market Revenue Vs. CAGR by Country

Key Takeaway: The air conditioner market in Vietnam will register the highest CAGR among
ASEAN-6 countries, followed by Indonesia.

Total Air Conditioner Market: Market: Revenue vs. CAGR by Country, ASEAN-6, 2018–2023
10.0
Vietnam
9.0
8.0 The Philippines
CAGR, 2018–2023 (%)

7.0
6.0
5.0
Indonesia
Malaysia Thailand
4.0
Singapore
3.0
2.0
1.0
0.0
0.0 200.0 400.0 600.0 800.0 1,000.0 1,200.0 1,400.0 1,600.0 1,800.0 2,000.0

Market Revenue in 2023 ($ Million)

Key: Size of bubble indicates market size in 2023 Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 39
Revenue Forecast by Country

Total Air Conditioner market: Revenue Forecast by Country, ASEAN-6, 2016–2023

Indonesia Vietnam Thailand Malaysia The Philippines Singapore

Year ($ Million) ($ Million) ($ Million) ($ Million) ($ Million) ($ Million)

2016 1,521.3 1,219.0 1,101.6 764.2 680.2 247.4

2017 1,597.4 1,284.8 1,155.6 801.6 711.5 256.3

2018 1,683.7 1,359.3 1,215.7 843.3 746.4 266.0

2019 1,784.7 1,446.3 1,283.8 890.5 786.7 276.9

2020 1,902.5 1,547.6 1,360.8 944.8 833.1 289.1

2021 2,041.3 1,666.7 1,449.2 1,007.2 887.2 303.0

2022 2,204.7 1,808.4 1,550.7 1,078.7 950.2 318.8

2023 2,396.5 1,976.6 1,668.5 1,160.7 1,022.4 336.6

CAGR (%) 7.3 7.8 6.5 6.6 6.5 4.8

Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 40
Percent Revenue by Vertical Market

Key Takeaway: Air conditioners for the office segment alone generated $2,421.3 million in revenue
in 2018.

Total Air Conditioner Market: Percent Revenue by Vertical Market, ASEAN-6, 2018

Government
2.3% Residential
Retail Industrial
16.9% 29.2%
12.0%
Hospitality
Education 9.4%
1.0% Healthcare
2.5%

Commercial Revenue
$3,595.2 Million

Office
62.9%

Commercial
58.8%

2018
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 41
Revenue Forecast by Vertical Market

Key Takeaway: Residential and retail segments are expected to grow the fastest during the forecast
period.

Total Air Conditioner Market: Revenue Forecast by Vertical Market, ASEAN-6, 2018–2023

Application Segments 2018 ($ Million) 2023 ($ Million) CAGR (%)

Residential 1,785.4 2,551.3 7.4

Office 2,421.3 3,287.5 6.3

Healthcare 91.7 128.4 7.0

Education 36.7 42.8 3.1

Hospitality 342.4 496.6 7.7

Retail 617.5 916.1 8.2

Government 85.6 111.3 5.4

Industrial 733.7 1,027.4 7.0

Total 6,114.4 8,561.3 7.0

Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 42
Revenue Forecast Discussion by Vertical Market
Residential
• The residential segment in
ASEAN witnesses a very high
demand for air conditioners. It
contributed a 28.2% share of the
market revenue in 2018.
• Building construction activity in
Asia-Pacific is led by the
Southeast Asian region, primarily
due to population growth,
increasing urbanization, and
economic activities in developing
countries such as Indonesia and
Thailand.
• The demand for green and
sustainable buildings leads to a
demand for energy-efficient air
conditioners, and is expected to
drive the replacement market.
PA7F-19
Commercial
• Governments’ focus on energy
efficiency, especially in public and
commercial buildings, is driving
growth of air conditioner market
in this segment.
• Mandatory energy audit for all
existing commercial buildings
above a determined range of
connected electricity load in most
countries will lead to a demand
for new-age efficient air
conditioner units.
• Trends such as redevelopment of
existing commercial areas to
achieve higher efficiency and
sustainability; high demand for
new office and retail spaces; and
the development of smart cities
will drive the demand further.
Industrial
• The industrial segment, though,
accounting for a small 12.0%
share in 2018, holds strategic
significance in the air conditioner
market in terms of customization
and niche applications for PAC
and VRF systems.
• Chemical: Air conditioning
requirements in this industry focus
mainly on process heating and
cooling, which account for 80% of
the energy consumption.
• Pharmaceutical and Biotech:
HVAC, which accounts for 65% of
the energy use, is an area of focus
in these industries.
• Electronics: This industry presents
strong opportunities for HVACs,
which account for half of the
energy consumed.
Source: Frost & Sullivan
43
 Market Share and Competitive Analysis—Total Air
Conditioner Market

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PA7F-19 44
Market Share

Key Takeaway: Japanese and Korean companies dominate the top two tiers of the market.

Total Air Conditioner Market: Competitive Structure, ASEAN-6, 2018

Tier 1:
Panasonic, Daikin

Tier 2:
Johnson Controls, LG, Mitsubishi Electric

Others:
United Technology Corporation, Samsung,
Sharp, Haier, Trane, MHI, Midea, Gree, etc.

Source: Frost & Sullivan

PA7F-19 45
Market Share Analysis

The ASEAN air conditioner market is keenly contested. Total Air Conditioner Market: Market Share
Japanese manufacturers are currently slightly ahead of Analysis, ASEAN-6, 2018
the rest in terms of market share.

Korean manufacturers LG and Samsung are seeing Company Revenue ($ Million)

faster growth in ASEAN-6 and are challenging the likes
of Daikin and Panasonic.
Tier I 2,568.0
Tier I companies accounted for 42.0% of the ASEAN
air conditioner market revenue in 2018. Tier II 1,620.4

These companies include Daikin and Panasonic which

Others* 1,926.0
together contributed $2,568.0 million in 2018.

Tier II companies held 26.5% of the market share, Total 6,114.4

ringing in $1,620.4 million in 2018.
Others* includes United Technology Corporation, Samsung,
Johnson Controls (Hitachi, York), LG, and Mitsubishi Sharp, Haier, Trane, MHI, Midea, Gree, etc.
Electric are the companies operating in this tier.
Chinese companies like Haier, Midea, and Gree, who
sell products at an average 10%-30% cheaper than
the well-entrenched brands, are also seeing faster
revenue growth.
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 46
Competitive Environment

Total Air Conditioner Market: Competitive Structure, ASEAN-6, 2018

Number of Companies in
>25 Companies
the Market

Competitive Factors Cost, energy efficiency, technical support, technology, product reliability

Key End-user Groups Residential, office, retail, and hospitality

Major Market Participants Daikin, Panasonic, Johnson Controls, Mitsubishi Electric, LG

Market Share of Top 5

68.5%
Competitors

Other Notable Market United Technology Corporation, Samsung, Sharp, Haier, Trane, MHI,
Participants Midea, Gree

Mainly through the retail channel for the residential segment and through
Distribution Structure
project developers for the commercial and industrial segments

Source: Frost & Sullivan

PA7F-19 47
Top Competitors—Recent Activity and Market Strategy

Daikin

Residential-use Air Conditioners

• Daikin increased sales mainly in Vietnam and Indonesia by strengthening its dealer networks in regional cities
and service structure, which enabled it to capture the demand from the growing middle-income groups.
• The company plans to strengthen the development of differentiated products such as multi air units and focus
mainly on India, Vietnam, and Thailand to increase the sales of its highly energy-efficient inverter air conditioners.
Commercial-use Air Conditioners
• Sales in this segment increased significantly in India, Vietnam, Thailand, and Australia, with the company
strengthening its dealerships and process specification activities.
• Daikin intends to continue to focus on developing dealerships, and recently launched inverter air conditioners that
adopt the R32 refrigerant for cooling.

Panasonic

• Panasonic has been focusing on growing its sales in Southeast Asia. It has started local production in Thailand
and is also investing in expanding production and distribution facilities in Malaysia to cater to growing demand
from the ASEAN region.
• Having successfully completed its 100th anniversary last year, Panasonic is now looking to aggressively push the
demand and sales of its smart air conditioner models. The company recently launched its R32 inverter air
conditioners as well as its split air conditioner series with nanoe technology.
Source: Frost & Sullivan

PA7F-19 48
Top Competitors—Recent Activity and Market Strategy
(continued)

Mitsubishi Electric

• Mitsubishi Electric recently launched two new models to cater to the growing demand for cost-effective and
energy-efficient air conditioners.
• The company has been going green, not just with its energy-efficient air conditioners but also honing its
manufacturing processes to ensure minimum environmental impact. It also has the widest range of air
conditioners in the market with maximum energy efficiency ratings.
• To expand its market share in ASEAN, the company plans to broaden its sales network in Southeast Asia.
• Mitsubishi Electric will complete 100 years of existence in 2020.

LG

• In view of worsening air pollution levels, LG has launched its 'all-in-one' air conditioners that combine cooling,
heating, humidification, dehumidification, and air-purifying features in one device. This model is also equipped
with an AI-based voice assistant.
• This model was launched under the company’s ‘Signature’ brand, aiming to take the lead in the high-priced air
conditioner market.
• LG is also relocating its air conditioning factories from Vietnam to Legok in Tangerang, Indonesia.

Source: Frost & Sullivan

PA7F-19 49
 Growth Opportunities and Companies to Action

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PA7F-19 50
Growth Opportunity 1—Sustainable Cooling
Applicable
Indonesia Malaysia
Markets
Applicable
Residential
Vision Transformation Segments
Mega Trends’ Impact
Context and Opportunity
Disruptive Applications
• Residential air conditioners in the
world total 1.2 billion; this number
Business Models is set to rise to 4.5 billion by 2030,
complicating the climate change
Current Offerings situation even further.
New Capabilities • While energy-efficient air
conditioners are gaining traction,
Value-add Services the rates of global warming are
very high, prompting the need for
higher order remedial measures.
Vertical Integration
• It is becoming crucial that air
Geographic Expansion conditioners are designed,
manufactured, installed and
operated in the most sustainable
Partnerships
way possible.
Investment/M&A
PA7F-19
Singapore Thailand Philippines Vietnam
Commercial Industrial
Call to Action
• Companies need to venture into
manufacturing sustainable air
conditioning products – for
example, solar air conditioners and
air conditioners that are also
carbon-capturing machines.
Industry News
A team of researchers from Singapore
have developed a model of a green
air conditioning unit:
• That uses water instead of
refrigerants,
• Is 40% more energy efficient, and
• Can cool a space to as low as 18
degrees Celsius.
Source: Frost & Sullivan
51
Growth Opportunity 2—Air Conditioning-as-a-Service
Applicable
Indonesia Malaysia
Markets
Applicable
Residential
Vision Transformation Segments
Mega Trends’ Impact
Context and Opportunity
Disruptive Applications
• The trend of anything-as-a-service
(XaaS) has been revolutionizing
Business Models many industries. This model holds
significant potential in the air
Current Offerings conditioning industry as well.
New Capabilities • This service involves providing
conditioned, cooled air, wherein the
Value-add Services end user pays only for what is
consumed.
Vertical Integration • The entire design, operation,
maintenance, repair, and service
Geographic Expansion works are undertaken by the
service provider.
Partnerships
• This results in significant energy
savings due to better management.
Investment/M&A
PA7F-19
Singapore Thailand Philippines Vietnam
Commercial Industrial
Call to Action
• Air conditioner manufacturers can
consider offering air conditioning-
as-a-service (ACaaS) as one of
their business models.
• Alternatively, they can forge
partnerships with ACaaS providers
to be their prefered air conditioner
systems supplier.
Industry News
Singapore-based Kaer Water tested
this model at INSEAD Business
School’s Singapore campus, where it
achieved reported cost savings of
over 70% through reduced energy
consumption and better management.
Source: Frost & Sullivan
52
Strategic Imperatives for Success and Growth

Manufacturers will need to design air conditioning models giving due

consideration to the key parameters factors of sustainability and climate
change throughout the design, manufacturing, operation, and after-life
processes. The time is ripe to think beyond just energy efficiency.

Manufacturers should choose distributors that are strategically located in the

market and have well-developed relationships, and provide them with
necessary training to be able to convert sales effectively.

Critical
Success
OEMs need to partner with distributors or third-party service providers to keep
Factors
close track of implementation of after-sales service support, ensure timely
availability of spare parts, and pitch in wherever possible.

Air conditioner manufacturers should also conduct marketing and advertising

activities aimed at relevant stakeholders including HVAC consultants,
architects, construction companies, and customers to build brand awareness
and brand recall value.

Source: Frost & Sullivan

PA7F-19 53
 Indonesia Analysis

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PA7F-19 54
Indonesia—Key Findings

Key Takeaway: Increasing rate of urbanization is contributing to a strong demand for

air conditioners in the country.

Factors Assessment Trend Air Conditioner Market: Percent

Revenue Share by AC Type,
Opportunity Size in 2023 ($ Million) 2,396.5 ▲ Indonesia, 2018

Price Sensitivity High ▲ VRF

PAC 7.1%
Key End-user Group Residential ● 4.1%
Price, product reliability, service
Purchase Influencers ●
support
Sales to the residential segment is
mainly through retailers that sell
various brands. Project developers
Distribution Structure ●
are the preferred channel for selling
to large commercial and industrial
users
Demand for Innovation Medium ▲
RAC
88.8%
Major Market Participants Panasonic, Daikin, Sharp, LG ●

Decreasing Stable Increasing

Trend
▼ ● ▲
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 55
Revenue Forecast

Key Takeaway: Indonesia’s air conditioner market will continue to grow fast, enabling the country to
maintain its leadership position in ASEAN throughout the forecast period.

Air Conditioner Market: Revenue Forecast, Indonesia, 2016–2023

3,000.0 Revenue CAGR, 2018–2023 = 7.3% 10.0

2,500.0
8.0
Revenue ($ Million)

Growth Rate (%)

2,000.0
6.0
1,500.0
4.0
1,000.0

2.0
500.0

0.0 0.0
2016 2017 2018 2019 2020 2021 2022 2023
Revenue 1,521.3 1,597.4 1,683.7 1,784.7 1,902.5 2,041.3 2,204.7 2,396.5
Growth Rate - 5.0 5.4 6.0 6.6 7.3 8.0 8.7
Year
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 56
Revenue Forecast Discussion

The air conditioner market in Indonesia generated $1,683.7 million in 2018, making
it the highest revenue-generating market in ASEAN.

Increasing urbanization and the resulting infrastructure development as part of

governmental plans such as the 20-year Development Plan and Master Plan are
increasing the demand for air conditioners in the country.

The residential and commercial segments contribute to the bulk of air conditioner
market revenues. This trend is expected to continue throughout the forecast period.

Split air conditioners dominate sales mainly due to the demand from residential
segments. A vast majority of the demand is from the Java region.

Indonesia’s air conditioner market is expected to expand at a CAGR of 7.3% until

2023, courtesy the growing building construction industry and regulations promoting
energy conservation in buildings. The market is expected to be worth $2,396.5
million in 2023.
Source: Frost & Sullivan

PA7F-19 57
Market Share Analysis

Key Takeaway: Panasonic edges ahead in a three-way fight for the top spot in this market.

Air Conditioner Market: Percent Revenue Share by • The air conditioner market in Indonesia
Company, Indonesia, 2018 is dominated by multinational
companies, specifically those from
Others PT Panasonic Japan.
31.0% Gobel
Indonesia
23.0% • The top four companies—Panasonic,
Daikin, LG, and Sharp—have all set up
manufacturing units in the country.

• These 4 companies occupy 69.0% of

PT. Daikin the market share for air conditioners.
Airconditioning
PT Sharp Indonesia • Among the average income earners,
Indonesia 19.0%
10.0%
cost is an important factor when
purchasing air conditioners. Chinese
LG Electronics
Indonesia brands have penetrated the market
17.0% targeting this income group with their
low-priced goods.
Others includes Mitsubishi Electric, UTC, Samsung , MHI, JCI, Trane, Midea, Gree,
and Haier.

Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 58
 Malaysia Analysis

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PA7F-19 59
Malaysia—Key Findings

Key Takeaway: Malaysia witnesses strong demand for energy-efficient air conditioners.

Factors Assessment Trend Air Conditioner Market: Percent

Revenue Share by AC Type, Malaysia,
Opportunity Size in 2023 ($ Million) 1,160.7 ▲ 2018

Price Sensitivity Medium-high ▲ VRF

12.2%
Key End-user Group Office ●
PAC
Quality, reliability, energy efficiency, 8.8%
Purchase Influencers ●
price
Sales to the residential segment is
mainly through retailers that sell
various brands. Project developers
Distribution Structure ●
are the preferred channel for selling
to large commercial and industrial
users
Demand for Innovation Medium-high ▲ RAC
79.0%

Major Market Participants Panasonic, Daikin, JCI

●

Decreasing Stable Increasing

Trend
▼ ● ▲
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 60
Revenue Forecast

Key Takeaway: Demand from the residential and commercial segments will buoy market growth in
Malaysia.

Air Conditioner Market: Revenue Forecast, Malaysia, 2016–2023

Revenue CAGR, 2018–2023 = 6.6%
1,400.0 8.0

1,200.0 7.0

6.0
Revenue ($ Million)

1,000.0

Growth Rate (%)

5.0
800.0
4.0
600.0
3.0
400.0
2.0
200.0 1.0

0.0 0.0
2016 2017 2018 2019 2020 2021 2022 2023
Revenue 764.2 801.6 843.3 890.5 944.8 1,007.2 1,078.7 1,160.7
Growth Rate - 4.9 5.2 5.6 6.1 6.6 7.1 7.6
Year
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 61
Revenue Forecast Discussion

The Malaysian air conditioner market is in the growth phase. This market was
valued at $843.3 million in 2018.

Growth in the residential market is largely influenced by the increase in the number
of housing units sold, in line with government’s efforts to help low- and middle-
income families.

Energy efficiency is an important criterion for customers while choosing air

conditioners. As electricity prices have been on the rise, energy rating is a big draw.

The Malaysian government has made it mandatory for all non-residential buildings
to comply with energy efficiency requirements according to the Uniform Building By-
Laws (UBBL). The push for green buildings, smart buildings, and smart cities will
also increase the demand for more energy-efficient air conditioners.

The market is expected to expand at a CAGR of 6.6% from 2018 to 2023 and reach
a revenue of $1,160.7 million in 2023.

Source: Frost & Sullivan

PA7F-19 62
Market Share Analysis

Key Takeaway: Panasonic was the clear leader in the Malaysian air conditioner market in 2018.

Air Conditioner Market: Percent Revenue Share by • Panasonic led the market in terms of
Company, Malaysia, 2018 revenue in 2018. The company has a
strong presence in Malaysia with a
huge plant in Shah Alam.
Panasonic
Others • This plant has been operational since
36.0% Malaysia Sdn
Bhd 1972 and now produces 3.5 million sets
32.0% a year. Room air conditioners and
commercial air conditioners are
exported to several countries.
• Panasonic, Daikin, and JCI complete
the top 3 in terms of market share. For
For Daikin, the residential segment
makes up over 60% of sales, while the
Johnson Daikin Air remaining 40% comes from the light
Controls (York) Conditioning commercial, commercial, and industrial
12.0% Malaysia segments. Daikin currently exports
20.0%
65% of its air conditioner units from
Others includes Mitsubishi Electric, UTC, Samsung , MHI, JCI , Trane, Acson, Sharp, Malaysia, and plans to increase this to
Midea, Gree, and Haier.
70% in 2020.
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 63
 Singapore Analysis

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PA7F-19 64
Singapore—Key Findings

Key Takeaway: Demand for chillers and VRF systems is fast increasing in Singapore.

Factors Assessment Trend Air Conditioner Market: Percent

Revenue Share by AC Type,
Opportunity Size in 2023 ($ Million) 336.6 ▲ Singapore, 2018

Price Sensitivity Medium ▲

Key End-user Group Office ● RAC

36.1%
Purchase Influencers Price, energy efficiency, features ● VRF
53.5%
Sales to the residential segment is
mainly through retailers that sell
various brands. Project developers
Distribution Structure ●
are the preferred channel for selling
to large commercial and industrial
users PAC
10.4%
Demand for Innovation High ▲

Daikin, Mitsubishi Electric,

Major Market Participants
Panasonic ●

Decreasing Stable Increasing

Trend
▼ ● ▲
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 65
Revenue Forecast

Key Takeaway: Growth in the retrofit market will drive the overall air conditioner business in
Singapore.

Air Conditioner Market: Revenue Forecast, Singapore, 2016–2023

Revenue CAGR, 2018–2023 = 4.8%
400.0 6.0

350.0
5.0
Revenue ($ Million)

300.0

Growth Rate (%)

4.0
250.0

200.0 3.0

150.0
2.0
100.0
1.0
50.0

0.0 0.0
2016 2017 2018 2019 2020 2021 2022 2023
Revenue 247.4 256.3 266.0 276.9 289.1 303.0 318.8 336.6
Growth Rate - 3.6 3.8 4.1 4.4 4.8 5.2 5.6
Year
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 66
Revenue Forecast Discussion

The air conditioner market in Singapore is relatively the most mature market in
ASEAN in terms of penetration rates. This market was worth $266.0 million in 2018.

While split air conditioners dominate the residential and light commercial segments,
the demand for VRF systems from large commercial and industrial users is
expected to increase during the forecast period.

Due to the overall economic downturn and prolonged property cooling measures,
the construction industry is expected to hit a pause during the forecast period, thus
slowing down the demand for air conditioners from new buildings.
The retrofit market will create a demand for energy-efficient air conditioners in the
next few years. The Building & Construction Authority (BCA) is targeting at least
80.0% of all buildings in the country to achieve the BCA Green Mark Certified rating
by 2030. This will be a major driver for the growth of the retrofit market.

While new build installations will be impacted by the cyclical nature of the
construction market, the retrofit market will grow steadily, enabling the air
conditioner market to reach a size of $336.6 million in 2023.

Source: Frost & Sullivan

PA7F-19 67
Market Share Analysis

Key Takeaway: Japanese manufacturers dominate the air conditioner market in Singapore,
occupying the top 3 positions.

Air Conditioner Market: Percent Revenue Share by • Daikin is the market leader for air
Company, Singapore, 2018 conditioners in Singapore. The
company celebrated its 50th
Daikin
(Singapore) Pte anniversary in the country in 2018.
Others
34.0% Ltd After achieving success with energy-
25.0% efficient air conditioners, the company
is now looking towards pushing smart
technologies in the country.

• Mitsubishi Electric has been going

green, not just with its energy-efficient
air conditioners but also honing its
Mitsubishi manufacturing processes to ensure
Electric Asia
Pte Ltd minimum environmental impact. The
Panasonic Asia
21.0% company has the widest range of air
Pacific Pte Ltd
20.0% conditioners in the market with
maximum energy efficiency ratings.
Others includes LG, UTC, Samsung , MHI, JCI, Fujitsu, Trane, Midea,
Gree, and Haier.

Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 68
 Thailand Analysis

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PA7F-19 69
Thailand—Key Findings

Key Takeaway: Increasing building construction activity drives the demand for new air conditioners.

Factors Assessment Trend Air Conditioner Market: Percent

Revenue Share by AC Type, Thailand,
Opportunity Size in 2023 ($ Million) 1,668.5 ▲ 2018

Price Sensitivity Medium-high ▲

VRF
Key End-user Group Office, retail ● 53.5%

PAC
Purchase Influencers Price, brand recognition, reliability ● 10.4%
Sales to the residential segment is
mainly through retailers that sell
various brands. Project developers
Distribution Structure ●
are the preferred channel for selling
to large commercial and industrial
users.
Demand for Innovation Medium ▲ RAC
36.1%

Major Market Participants Mitsubishi Electric, Daikin, LG

●

Decreasing Stable Increasing

Trend
▼ ● ▲
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 70
Revenue Forecast

Key Takeaway: Strong demand from the residential and retail segments is helping the growth of the
air conditioner market in Thailand.

Air Conditioner Market: Revenue Forecast, Thailand, 2016–2023

Revenue CAGR, 2018–2023 = 6.5%
1,800.0 8.0

1,600.0 7.0
Revenue ($ Million)

1,400.0
6.0

Growth Rate (%)

1,200.0
5.0
1,000.0
4.0
800.0
3.0
600.0
2.0
400.0

200.0 1.0

0.0 0.0
2016 2017 2018 2019 2020 2021 2022 2023
Revenue 1,101.6 1,155.6 1,215.7 1,283.8 1,360.8 1,449.2 1,550.7 1,668.5
Growth Rate - 4.9 5.2 5.6 6.0 6.5 7.0 7.6
Year
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 71
Revenue Forecast Discussion

The air conditioner market in Thailand was worth $1,283.8 million in 2018. It is
expected to grow to $1,668.5 million by 2023.

Thailand is a fast-developing nation with steadily increasing urbanization rates that

promote the building construction industry. The growth of the air conditioner market
in the country is largely attributed to the growth in new building construction.

The rate of air conditioner penetration in Thailand is still low, indicating ample
market growth opportunities.

The highly competitive property development market in Thailand forces developers

to increase customer value. Developers therefore provide air conditioners as a
package to residential buyers by forging deals with manufacturers.

Primarily driven by increasing new building construction as well as the retrofit

market, the Thailand air conditioner market is expected to expand at a CAGR of
6.5% between 2018 and 2023.

Source: Frost & Sullivan

PA7F-19 72
Market Share Analysis

Key Takeaway: Japanese companies face stiff competition from Korean and Chinese manufacturers
in the Thailand market.

Air Conditioner Market: Percent Revenue Share by • Mitsubishi Electric launched its JP
Company, Thailand, 2018 Series of new inverter air conditioners
Mitsubishi in Thailand in 2018. They are priced
Electric Asia 5%-10% lesser to target the growing
(Thailand) Co.
Others Ltd
middle class population in the country.
40.0% 26.0%
• To increase customer satisfaction,
Daikin recently launched Thailand’s
first all-in-one customer service center
equipped with smart technology and
systems and the My Daikin application
Daikin Air that caters to all service needs.
conditioning
LG Electronics (Thailand) Co., • LG’s air conditioner factory in Rayong,
(Thailand) Co. Ltd. Thailand is its key global
Ltd 23.0%
manufacturing hub with a production
11.0%
capacity of 1.3 million units per year.
Others includes Panasonic, Toshiba Midea, UTC, Samsung , MHI, Electrolux, Sharp,
JCI, Trane, Gree, and Haier.

Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 73
 The Philippines Analysis

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PA7F-19 74
The Philippines—Key Findings

Key Takeaway: Demand for energy-efficient air conditioners will drive the growth of the replacement
market in the country.

Factors Assessment Trend Air Conditioner Market: Percent

Revenue Share by AC Type, The
Opportunity Size in 2023 ($ Million) 1,022.4 ▲ Philippines, 2018

Price Sensitivity Medium-high ▲

VRF
14.4%
Key End-user Group Residential, Office ●
PAC
7.2%
Purchase Influencers Price, energy efficiency, reliability ●
Sales to the residential segment is
mainly through retailers that sell
various brands. Project developers
Distribution Structure ●
are the preferred channel for selling
to large commercial and industrial
users
Demand for Innovation Medium ▲
RAC
78.3%
Major Market Participants Concepcion Carrier, Panasonic, LG
●

Decreasing Stable Increasing

Trend
▼ ● ▲
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 75
Revenue Forecast

Key Takeaway: The increasing rate of urbanization will drive the demand for air conditioners in the
country.

Air Conditioner Market: Revenue Forecast, The Philippines, 2016–2023

Revenue CAGR, 2018–2023 = 6.5%
1,200.0 8.0

7.0
1,000.0
Revenue ($ Million)

6.0

Growth Rate (%)

800.0
5.0

600.0 4.0

3.0
400.0
2.0
200.0
1.0

0.0 0.0
2016 2017 2018 2019 2020 2021 2022 2023
Revenue 680.2 711.5 746.4 786.7 833.1 887.2 950.2 1,022.4
Growth Rate - 4.6 4.9 5.4 5.9 6.5 7.1 7.6
Year
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 76
Revenue Forecast Discussion

The air conditioner market in the Philippines was worth $746.4 million in 2018.
Growing building construction industry as result of increasing urbanization is driving
the air conditioner market in the country.

Traditionally, window air conditioners have been popular in the residential segment.
With the rise in electricity prices, the energy inefficiency of these air conditioners
have come to the fore prompting more demand for energy-efficient models.

The number of green buildings in the country is on the rise. There has also been a
sharp increase in the number of green-certified office buildings.

The Philippines has been promoting efficient use of energy and granting incentives
for energy-efficient/conservation projects. The government’s efforts at regulating
energy conservation, especially in the industrial and commercial segments, have
helped boost the adoption of energy-efficient air conditioners in the country.

The country’s air conditioner market is expected to expand at a CAGR of 6.5%

between 2018 and 2023, with the revenue reaching $1,022.4 million by 2023.

Source: Frost & Sullivan

PA7F-19 77
Market Share Analysis

Key Takeaway: Japanese and South Korean companies are steadily gaining a foothold in this market
that has been dominated by CCAC* for several years running.

Air Conditioner Market: Percent Revenue Share by • Concepcion-Carrier Air Conditioning

Company, The Philippines, 2018 Company (CCAC) is the market
leader in Philippines. It operates as a
Concepcion
Carrier Air
joint venture between Concepcion
Others Conditioning Industrial Corporation (60.0%) and
35.0% Company Carrier Air Conditioning Philippines
30.0% Inc. (40.0%). Carrier is a part of UTC.

• Panasonic is planning to launch nine

new air conditioner models in the
country equipped with features that
improve indoor air quality.

Panasonic • In response to rising demand for

LG Electronics
Manufacturing inverter air conditioners, primarily from
Philippines middle-income consumers, Panasonic
Philippines Inc.
Corp
15.0% intends to employ inverter technology
20.0%
on low- and middle-priced air
Others includes Daikin, Mitsubishi Electric, Samsung, MHI, JCI, Trane, Sharp,
Midea, Gree, and Haier.
conditioners models.

*CCAC – Concepcion Carrier Air Conditioning Company. Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 78
 Vietnam Analysis

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PA7F-19 79
Vietnam—Key Findings

Key Takeaway: Strong demand from the residential and commercial segments will drive market
growth in Vietnam.

Factors Assessment Trend Air Conditioner Market: Percent

Revenue Share by AC Type, Vietnam,
Opportunity Size in 2023 ($ Million) 1,976.6 ▲ 2018

Price Sensitivity Medium-high ▲

VRF
15.2%
Key End-user Group Residential, Office ●
PAC
Price, brand recognition, reliability, 4.2%
Purchase Influencers ●
efficiency
Sales to the residential segment is
mainly through retailers that sell
various brands. Project developers
Distribution Structure ●
are the preferred channel for selling
to large commercial and industrial
users
Demand for Innovation Medium ▲
RAC
80.6%
Major Market Participants Daikin, Panasonic, LG
●

Decreasing Stable Increasing

Trend
▼ ● ▲
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 80
Revenue Forecast

Key Takeaway: Vietnam’s air conditioner market will grow the fastest among ASEAN-6 countries.

Air Conditioner Market: Revenue Forecast, Vietnam, 2016–2023

Revenue CAGR, 2018–2023 = 7.8%
2,500.0 10.0

2,000.0 8.0
Revenue ($ Million)

Growth Rate (%)

1,500.0 6.0

1,000.0 4.0

500.0 2.0

0.0 0.0
2016 2017 2018 2019 2020 2021 2022 2023
Revenue 1,219.0 1,284.8 1,359.3 1,446.3 1,547.6 1,666.7 1,808.4 1,976.6
Growth Rate - 5.4 5.8 6.4 7.0 7.7 8.5 9.3
Year
Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 81
Revenue Forecast Discussion

Vietnam’s air conditioner market is the second biggest in ASEAN after Indonesia
and the fourth largest in Asia behind China, India, and Indonesia. The market was
worth $1,359.3 million in 2018.

Growing building construction activities, coupled with regulations promoting energy

conservation, are expected to drive an increase in the demand for air conditioners,
particularly energy-efficient ones.

Ho Chi Minh City alone is estimated to account for about 35.0% of the sales of air
conditioner units in Vietnam.

In Vietnam, air conditioners are subjected to mandatory labeling under the labeling
program Vietnam Energy Star. The country has also introduced mandatory energy
performance standards (MEPS) for the manufacture and import of all air
conditioners.
The air conditioner market in Vietnam is the fastest growing among ASEAN-6
countries analyzed in this study. It is expected to register a CAGR of 7.8% between
2018 and 2023, to be worth $1,976.6 million by 2023.

Source: Frost & Sullivan

PA7F-19 82
Market Share Analysis

Key Takeaway: Japanese manufacturers Daikin and Panasonic occupy the lion’s share of Vietnam’s
air conditioner market.

Air Conditioner Market: Percent Revenue Share by • Vietnam’s air conditioner market is
Company, Vietnam, 2018 huge and rapidly growing as well.
Most leading market participants have
Daikin taken huge steps to cater to the fast-
Others
31.0%
Vietnam growing demand for air conditioners.
29.0%
• Daikin began full-scale operations of a
new 210,000m2 air conditioner
factory in the suburbs of Hanoi in
2018.
• Another Japanese manufacturer
Panasonic is boosting production at
its Malaysian facility to increase
LG Electronics
Vietnam Inc. Panasonic exports to Vietnam.
15.0% Vietnam Co.
Ltd • LG has planned to shift its air
25.0% conditioning production facility from
Others includes Mitsubishi Electric, Samsung, Electrolux, UTC, MHI, JCI, Trane, Midea, Vietnam to Legok in Tangerang,
Gree, and Haier. Indonesia.

Note: All figures are rounded. The base year is 2018. Source: Frost & Sullivan

PA7F-19 83
 The Last Word

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PA7F-19 84
The Last Word—3 Big Predictions

The demand for energy-efficient air conditioners will soar in the short term.
Chillers and VRF systems will gain further traction. Increasing prominence of
1 green buildings and the mushrooming of smart cities will help further the
growth of the air conditioner market. The commercial segment will dominate
in terms of revenue.

Over the medium term, the market will focus more on business model
2 innovations while continuing to develop technologically. This will lead to new
ways, like ACaaS, of delivering air conditioners.

With increasing awareness about energy efficiency and sustainability, the

3 market will see a shift in domination from certain low-cost, sub-standard
Chinese brands to known brands from organized players.

Source: Frost & Sullivan

PA7F-19 85
Legal Disclaimer

Frost & Sullivan is not responsible for any incorrect information supplied to us by
manufacturers or users. Quantitative market information is based primarily on interviews and
therefore is subject to fluctuation. Frost & Sullivan research services are limited publications
containing valuable market information provided to a select group of customers. Our
customers acknowledge, when ordering or downloading, that Frost & Sullivan research
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For information regarding permission, write to:

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© 2019 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan.
No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

PA7F-19 86
 Appendix

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PA7F-19 87
Market Engineering Methodology

One of Frost & Sullivan’s core deliverables

is its Market Engineering studies. They
are based on our proprietary Market
Engineering Methodology. This approach,
developed across the 50 years of
experience assessing global markets,
applies engineering rigor to the often
nebulous art of market forecasting and
interpretation.

A detailed description of the methodology

can be found here.

Source: Frost & Sullivan

PA7F-19 88
Abbreviations and Acronyms Used

AC Air Conditioner
ACaaS Air Conditioner as a Service
AI Artificial Intelligence
ASEAN Association of Southeast Asian Nations
CAGR Compound Annual Growth Rate
CO Carbon Monoxide
HVAC Heating, Ventilation, Air Conditioning
M&E Mechanical & Electrical
OEM Original Equipment Manufacturer
PAC Package Air Conditioner
RAC Room Air Conditioner
SI System Integrator
VAR Value Added Reseller
VRF Variable Refrigerant Flow
VRV Variable Refrigerant Volume
Source: Frost & Sullivan

PA7F-19 89
List of Exhibits

Exhibit Slide Number

Total Air Conditioner Market: Market Engineering Measurements, ASEAN-6, 2018 9

Total Air Conditioner Market: Percent Revenue Breakdown by Country, ASEAN-6, 2018 17

Total Air Conditioner Market: Distribution Channel Analysis, ASEAN-6, 2018 18

Total Air Conditioner Market: Value Chain Analysis, ASEAN-6, 2018 19

Total Air Conditioner Market: Key Market Drivers, ASEAN-6, 2019–2023 21

Total Air Conditioner Market: Energy Efficiency Goals, ASEAN-6, 2018 24

GDP Per Capita, ASEAN, 2019F and 2023F 26

Total Air Conditioner Market: Key Market Restraints, ASEAN-6, 2019–2023 27

Total Air Conditioner Market: Market Engineering Measurements, ASEAN-6, 2018 30

Total Air Conditioner Market: Revenue Forecast, ASEAN-6, 2016–2023 33

Total Air Conditioner Market: Percent Revenue by AC Type, ASEAN-6, 2018 35

Total Air Conditioner Market: Percent Unit Shipment by AC Type, ASEAN-6, 2018 35

Total Air Conditioner Market: Percent Revenue Forecast by Country, ASEAN-6, 2016–2023 37

PA7F-19 90
List of Exhibits (continued)

Exhibit Slide Number

Total Air Conditioner Market: Revenue by Country, ASEAN-6, 2018 38

Total Air Conditioner Market: Market: Revenue vs. CAGR by Country, ASEAN-6, 2018–2023 39

Total Air Conditioner market: Revenue Forecast by Country, ASEAN-6, 2016–2023 40

Total Air Conditioner Market: Percent Revenue by Vertical Market, ASEAN-6, 2018 41

Total Air Conditioner Market: Revenue Forecast by Vertical Market, ASEAN-6, 2018–2023 42

Total Air Conditioner Market: Competitive Structure, ASEAN-6, 2018 45

Total Air Conditioner Market: Market Share Analysis, ASEAN-6, 2018 46

Total Air Conditioner Market: Competitive Structure, ASEAN-6, 2018 47

Air Conditioner Market: Percent Revenue Share by AC Type, Indonesia, 2018 55

Air Conditioner Market: Revenue Forecast, Indonesia, 2016–2023 56

Air Conditioner Market: Percent Revenue Share by Company, Indonesia, 2018 58

Air Conditioner Market: Percent Revenue Share by AC Type, Malaysia, 2018 60

Air Conditioner Market: Revenue Forecast, Malaysia, 2016–2023 61

PA7F-19 91
List of Exhibits (continued)

Exhibit Slide Number

Air Conditioner Market: Percent Revenue Share by Company, Malaysia, 2018 63

Air Conditioner Market: Percent Revenue Share by AC Type, Singapore, 2018 65

Air Conditioner Market: Revenue Forecast, Singapore, 2016–2023 66

Air Conditioner Market: Percent Revenue Share by Company, Singapore, 2018 68

Air Conditioner Market: Percent Revenue Share by AC Type, Thailand, 2018 70

Air Conditioner Market: Revenue Forecast, Thailand, 2016–2023 71

Air Conditioner Market: Percent Revenue Share by Company, Thailand, 2018 73

Air Conditioner Market: Percent Revenue Share by AC Type, The Philippines, 2018 75

Air Conditioner Market: Revenue Forecast, The Philippines, 2016–2023 76

Air Conditioner Market: Percent Revenue Share by Company, The Philippines, 2018 78

Air Conditioner Market: Percent Revenue Share by AC Type, Vietnam, 2018 80

Air Conditioner Market: Revenue Forecast, Vietnam, 2016–2023 81

Air Conditioner Market: Percent Revenue Share by Company, Vietnam, 2018 83

PA7F-19 92