Europe HVAC Market - Industry Outlook & Forecast 2024-2029

The Europe HVAC market was valued at USD 64.33 billion in 2023 and is expected to grow at a CAGR of 6.24% from 2023 to 2029.

MARKET TRENDS & DRIVERS

Climatic Conditions and Heatwaves Propel the Europe HVAC Market

Air-conditioned units used and installed in office spaces are standard in Europe. However, it isn't easy to find AC units in homes. Cities across the region are not designed to handle the soaring temperature, and certain historic buildings are not even allowed to have a modern cooling system installed. Hence, these factors promote the usage of portable cooling units in most residential and commercial buildings across European countries. Furthermore, the HVAC industry constantly updates heating and cooling systems to increase energy efficiency. These advances increase energy savings, help homeowners sustain climate change, and protect the environment. Hence, the increased temperature propels the demand for ACs for commercial and residential purposes. In 2021, the International Energy Agency (IEA) estimated that European air-conditioner stock will double in the next two decades as record heat becomes more prevalent. Hence, such factors drive the HVAC market's growth during the projected period.

Favorable Government Policies Across the Countries

The favorable government policies across the countries that support the usage of RES and prevent the emission of GHGs into the atmosphere are driving the Europe HVAC market. Policymakers are also trying to frame policies that can support the decarbonization of transportation and the management of power sectors. Implementing appliances using renewable sources can become mandatory for extensive and mega projects to be certified as sustainable and green building units. This can substantially drive the adoption of HVAC systems in residential and large commercial spaces.

INDUSTRY RESTRAINTS

High Installation and Upfront Costs

Despite the benefits associated with heating and ventilating equipment concerning their sustainable contribution to the environment, its high initial and upfront cost is hindering their adoption. This can be a major challenge, especially in the growing economies and price-sensitive markets of European countries, where cost is a major influencing factor for purchase. Although there is evidence that heating equipment generates low operational costs over time compared to conventional gas and solar heaters, the high installation cost is a burden for vendors in the Europe HVAC market. Also, the price is estimated to vary and fluctuate per the local dealer, market, home condition, and climate. Furthermore, the operating costs, based on the source of fuel such as natural gas, propane, or oil, in addition to electricity, are also influenced during the time of purchase. Although the hybrid or dual fuel heat pump may be an ideal solution for reducing operational costs, the hybrid category's high price and upfront cost are major market adoption challenges.

SEGMENTATION INSIGHTS

INSIGHTS BY EQUIPMENT TYPE

HVAC refers to heating, ventilation, air conditioning, collective heating, and cooling technologies used at residential, industrial, commercial, and public utility buildings. The Europe HVAC market can be divided into three categories based on functionality: heating, ventilation, and air conditioning. The heating segment holds the most significant European market share in 2023. The heating equipment sector is characterized by intense competition, as the same has extreme traction in the cold climatic conditions of the region. Many European residential buildings use central heating systems, which distribute heat throughout the entire building from a single heat source. Various energy sources, including electricity, natural gas, oil, and district heating, can power these heating systems. The heating equipment is generally fragmented; therefore, the industry is characterized by many local/domestic. Furthermore, heat pumps are the major revenue generators for the heating market, with air/water heat pumps and ground-source heat pumps having considerable applications. The heat pump market is mainly strong in single or two-family houses, with over 70% penetration rate. Apart from heat pumps, furnaces and boiler units have significant shares in the heating equipment market.

The air conditioning segment is projected to witness the highest segmental CAGR during the forecast period in the Europe HVAC market. Europe has a distinct climatic condition, with some regions experiencing mild summers while others, predominantly in the southern part of Europe, experience humid summers. Recently, heatwaves have become more intense and frequent, increasing demand for air conditioners or cooling solutions. The air conditioner (AC) equipment market is characterized by the presence of many vendors, both domestic and multinational. The market is seasonal and is characterized by modern technology. CAC and RAC segments constitute a major part of the market.

Segmentation by Equipment

• Heating
• Air Conditioning
• Ventilation

Segmentation by Heating

• Heat Pump
• Boiler Unit
• Furnace
• Others

Segmentation by Air Conditioning

• RAC
• CAC
• Chiller
• Heat Exchanger
• Others

Segmentation by Ventilation

• Air Handling Unit (AHU)
• Air filter
• Humidifier & Dehumidifier
• Fan Coil Unit
• Other Ventilation Equipment

INSIGHTS BY END USERS

The Europe HVAC market by end-user is segmented as residential, commercial, and others. The residential segment held the most prominent market share in 2023. The rise in construction of pools in high-rise buildings, enhancing the resale value prospect, disposable income, growing awareness of geothermal energy, the use of HVAC systems using renewable resources, and rising concern for sustainability and eco-friendly are expected to drive the market over the forecast period in the residential sector. However, during the forecast period, the commercial segment is projected to witness the fastest CAGR in the Europe HVAC market.

The growth of the commercial segment is attributable to the development of affordable and flexible HVAC that matches the complex and dynamic infrastructure and helps reduce utility bills. Institutions such as schools, colleges, sports complexes, and water parks use renewable technologies to differentiate themselves and showcase their commitment to reducing their carbon footprint. Restaurants, hotels, spas, and recreation centers are the major end-users in the segment, which poses a strong growth prospect for the next five years. Also, HVAC systems can gain adoption in the commercial segment by capitalizing on air source heat pumps as they are proven more energy-efficient and high-performing for large-scale operations throughout the year.

Segmentation by End-user

• Residential
• Commercial
• Others

GEOGRAPHICAL ANALYSIS

The Western European region held the most significant Europe HVAC market share, valued at over USD 36 billion in 2023. Major factors spiking the sales of HVAC equipment in the region are rising average construction spending, increasing retail building construction projects, rising government spending on sustainable building development, industrial developments, rapid urbanization, changing climatic conditions, and growth in disposable income across European countries.

Further, several Northern and Central European countries experience harsh cold weather yearly. The changing weather conditions and poor air quality maintenance determine the annual consumption pattern of HVAC equipment in European countries. Most Europe HVAC market manufacturers invest in innovations to gain a competitive advantage. Sales of energy-efficient equipment grew in the last four years due to EU directives pushing all stakeholders in the industry to invest in sustainable models of operation. Also, European countries have been emphasizing the utilization of energy-efficient HVAC systems. The demand for energy-efficient cooling and heating solutions has surged, driven by regulatory requirements and consumer preferences. Using efficient heat pumps in manufacturing facilities and residential and commercial buildings is a pivotal strategy for reducing greenhouse gases and achieving the goals outlined in the Green Deal and REPower EU targets.

Segmentation by Geography

• Western Europe (Germany, France, UK, Italy, Netherlands, Spain, Belgium)
• Nordic (Norway, Denmark, Sweden, Finland)
• Central & Eastern Europe (CEE) (Russia, Poland & Austria, Hungary, Czech Republic)

VENDOR LANDSCAPE

The Europe HVAC market benefits from large government incentives to end-users, with government objectives meeting carbon emission targets and other climate change control measures. Government schemes stimulated the demand for energy-efficient equipment. The industry is characterized by the existence of many market participants in each of the countries and each of the product categories. Aldes, Daikin, Johnson Controls, Mitsubishi Electric, Ostberg, Pentair, Robert Bosch, Rheem Manufacturing Company, Samsung, Siemens AG, Systemair, and Zehnder are the key players in the Europe HVAC market. Further, with technological upheaval, the industry has seen an influx of affordable systems. Vendors that have advanced technology and meet standards set from an ecological perspective have a competitive edge over other vendors. Hence, although sustainability is a significant factor in the HVAC industry, incorporating technology and statutory standards is a step ahead in the competitive market.

Key Company Profiles

• Aldes
• Daikin
• Johnson Controls
• Mitsubishi Electric
• Ostberg
• Pentair
• Robert Bosch
• Rheem Manufacturing Company
• Samsung
• Siemens AG
• Systemair
• Zehnder

Other Prominent Vendors

• Alfa Laval
• Carrier
• Honeywell International Inc
• LG
• Panasonic
• Midea
• Regal
• Raytheon Technologies
• Flakt Group
• Swegon
• VTS Group
• Nuaire
• Nortek
• Hitachi
• LU-VE
• Vent-Axia
• Rosenberg
• S & P
• Wolf
• CIAT
• AL-KO GROUP
• Dynair
• Danfoss
• Lennox
• Backer Springfield
• Dunhambush
• TCL
• Trox
• Vaillant Group
• Viessmann Group
• Stiebel Eltron
• NIBE Group
• Uponor Corporation
• Glen Dimplex
• Ferroli
• Elco Burners
• BDR Thermea Group
• Biddle Air Systems
• Riello Group
• Ingersoll Rand
• Camfil

KEY QUESTIONS ANSWERED

1. How big is the European HVAC market?
2. What is the growth rate of the Europe HVAC market?
3. Which region dominates the Europe HVAC market share?
4. What are the significant trends in the Europe HVAC market?
5. Who are the key players in the Europe HVAC market?