Split Air Conditioning Systems Market

Market Overview

The global split air conditioning systems market was valued at USD 105.90 billion in 2023. It is estimated to reach USD 154.02 billion by 2032, growing at a CAGR of 4.25% during the forecast period (2024–2032). Urbanization is accelerating globally, leading to an increased need for residential, commercial, and industrial spaces with advanced cooling systems, thereby driving the global split air conditioning systems market. Moreover, manufacturers are focusing on advancing these split air conditioning systems along with the integration of smart technologies, which is estimated to create opportunities for market expansion.

Split air conditioning systems comprise of two primary components, i.e., an indoor unit and an outdoor unit. The indoor unit holds the evaporator coil, which is responsible for cooling the air. On the other hand, the outdoor unit contains the compressor, condenser coil, and expansion valve. The connection between these units is established through refrigerant lines, which facilitate the circulation of refrigerant between them. 

Split systems offer advantages such as quiet operation, energy efficiency, and flexibility in installation, making them popular for both residential and commercial use. They can be ducted or ductless, providing options for different cooling needs and building layouts. With their ability to provide precise temperature control and customizable zoning, split air conditioning systems offer comfort and convenience in various environments.

Highlights

• Wall mounted dominates the installation segment.
• North America is the highest shareholder in the global market

Market Dynamics

Global Split Air Conditioning Systems Market Drivers

Rising Urbanization and Growing Disposable Incomes 

Urbanization is a significant factor driving the split air conditioning systems market, particularly in emerging economies. As more people migrate to urban areas, the demand for residential, commercial, and industrial spaces equipped with modern amenities increases. According to the United Nations, 68% of the global population is expected to live in urban areas by 2050, creating a vast market for advanced cooling solutions.

Concurrently, rising disposable incomes enable consumers to invest in better living conditions, including efficient air conditioning systems. This trend is especially pronounced in countries like China and India, where economic growth has led to a burgeoning middle class with greater purchasing power. The combination of urban expansion and increased consumer spending is expected to substantially boost the demand for split air conditioning systems, fostering market growth.

Global Split Air Conditioning Systems Market Restraint

High Initial Costs and Maintenance

Despite the numerous benefits of split air conditioning systems, their high initial costs can be a significant deterrent for potential buyers. The purchase and installation of these systems often require a substantial financial investment, typically ranging from USD 2,000 to USD 5,000 or more, depending on the system's complexity and size.

Additionally, the maintenance of split systems can be costly, as it often requires professional services to ensure optimal performance and longevity. This includes regular cleaning, refrigerant top-ups, and occasional repairs. For cost-sensitive consumers, especially in developing regions, these financial barriers can limit the adoption of split air conditioning systems, potentially slowing market growth despite energy efficiency and enhanced comfort benefits.

Global Split Air Conditioning Systems Market Opportunities

Technological Advancements and Smart Features

Technological advancements and smart features in split air conditioning systems present a significant market opportunity. Innovations such as IoT-enabled controls, smart thermostats, and energy-efficient inverter technology are revolutionizing the functionality and appeal of these systems. Consumers are increasingly seeking convenience and energy savings, which smart air conditioning systems can provide.

For instance, smart home ecosystems allow split ACs to be controlled via smartphones or voice assistants, enhancing user experience and operational efficiency. Moreover, advancements in inverter technology improve energy efficiency by adjusting compressor speed to retain the desired temperature, reducing energy consumption and costs. Manufacturers integrating these smart features into their products can attract tech-savvy consumers and tap into the growing demand for eco-friendly and intelligent home solutions, driving market growth and creating new revenue streams.

Regional Analysis

North America Dominates the Global Market

Based on region, the global split air conditioning systems market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America is the most significant global split air conditioning systems market shareholder and is expected to expand substantially during the forecast period. In North America, the split air conditioning systems market is expanding due to rising consumer expenditure on home comfort solutions and heightened awareness of energy-efficient appliances. The regional market is further driven by high disposable income, advanced technological integration, and a preference for smart home systems. The region's hot summer climate significantly boosts the demand for efficient cooling solutions, making split AC systems a main choice for residential and commercial applications.

The United States split air conditioning systems market is a significant player in North America, driven by the high demand for energy-efficient and technologically advanced cooling solutions. As per the U.S. Energy Information Administration, nearly 88% of American households use air conditioning, reflecting the region's substantial market potential. The growing adoption of smart home technologies is also propelling market growth. Smart air conditioning systems, integrated with IoT and AI, allow users to control and monitor their cooling systems remotely, enhancing energy efficiency and user convenience. For instance, according to the U.S. Energy Information Administration, residential air conditioning accounts for about 12% of total household energy use, indicating a substantial market for energy-saving split systems. Government incentives and rebates for energy-efficient appliances also encourage consumers to invest in modern air conditioning solutions.

The Canadian split air conditioning systems market is growing steadily, driven by increasing urbanization and changing climate patterns. While traditionally known for its colder climate, Canada has been experiencing warmer summers, boosting the need for effective cooling solutions. According to Statistics Canada, urbanization continues to rise, with over 81% of the population living in urban areas as of 2021. This urban growth is accompanied by an increased demand for residential and commercial spaces equipped with modern amenities, including efficient air conditioning systems.

The Canadian government's emphasis on energy efficiency and environmental sustainability also plays a critical role in market growth. Programs like the Canada Greener Homes Grant, which provides up to USD 5,000 for energy-efficient home upgrades, incentivize the adoption of high-efficiency split air conditioning systems. 

Consequently, all these factors are anticipated to boost the North American split air conditioning systems market growth.

The Asia-Pacific region is the fastest-growing market for split air conditioning systems, driven by rapid urbanization, increasing disposable incomes, and a hot climate. This region is witnessing prominent investments in infrastructure and residential projects, contributing to the growing demand for advanced air conditioning solutions. The rise of middle-class consumers and their preference for modern, comfortable living spaces are key factors contributing to market growth. 

China's split air conditioning systems market is a major market, driven by its large population, rapid urbanization, and growing middle class. As per the National Bureau of Statistics of China, the urban population in China reached 64.7% in 2021, up from 51.3% in 2011. This urbanization trend has resulted in an increased demand for residential and commercial buildings equipped with modern amenities, including air conditioning. The Chinese government's initiatives to improve energy efficiency and reduce greenhouse gas emissions have also boosted the adoption of energy-efficient split air conditioning systems. Furthermore, the increasing disposable incomes of Chinese consumers have enabled them to invest in better living conditions, further driving the market for split air conditioning systems.

India's split air conditioning systems market represents another significant market fueled by rapid economic growth, urbanization, and rising temperatures. According to the World Bank, India's urban population grew from 27.8% in 2001 to 34.9% in 2021. This urban expansion has created a substantial demand for air conditioning solutions. There has also been a rise in the introduction of novel split air conditioning systems with enhanced efficiency by the market players, which is also driving the regional market growth. For instance, in April 2024, LG Electronics introduced its newest line of air conditioners in split and window designs. These air conditioners are equipped with innovative 4-in-1 and 6-in-1 convertible technology and inverter compressors, resulting in exceptional efficiency and performance.

Thus, the factors above are anticipated to expedite the Asia-Pacific region's split air conditioning systems market. 

Segmental Analysis

The global split air conditioning systems market is segmented by type, capacity, installation, end-user, and distribution channel.

Based on type, the global market is divided into ductless systems, VRF (variable refrigerant flow) systems, and centralized systems. 

VRF (Variable Refrigerant Flow) systems are becoming popular in the split air conditioning systems market due to their advanced efficiency and flexibility. These systems use refrigerant as the cooling and heating medium, which is circulated within the building through a network of pipes, allowing for simultaneous heating and cooling in different zones. One of the primary advantages of these systems is their ability to precisely control the refrigerant flow to multiple indoor units, optimizing energy usage and enhancing comfort levels. These systems are particularly popular in commercial applications, such as office buildings and hotels, where the need for customized climate control and energy efficiency is paramount. The ability to integrate with smart building technologies further drives the demand for VRF systems.

Based on capacity, the global market is bifurcated into less than 2 tons, 2-4 tons, and above 4 tons. 

The 2-4 ton segment of split air conditioning systems is a significant market category, catering primarily to medium to large residential spaces and small to medium commercial establishments. Systems within this capacity range are ideal for cooling areas between 1,200 and 2,400 square feet, making them suitable for larger rooms or small office environments. The growing demand for enhanced indoor comfort and the trend towards larger living spaces in urban areas are driving the growth of this segment. Moreover, the 2-4 ton segment is witnessing increased adoption due to its balance of capacity and energy efficiency. It is a preferred choice among consumers looking for effective cooling solutions without excessive energy consumption.

Based on installation, the global market is segmented into wall-mounted, ceiling-mounted, and floor-standing. 

The wall-mounted segment dominates the split air conditioning systems market due to its widespread adoption in residential and small commercial applications. Wall-mounted units are preferred for their ease of installation, space-saving design, and cost-effectiveness. These units are typically installed high on a wall, ensuring optimal air distribution and minimizing floor space usage. The aesthetic appeal of these units, combined with their efficient cooling performance and relatively low installation costs, makes them a favored choice. Moreover, advancements in inverter technology and smart features, such as remote control via mobile apps, further enhance the attractiveness of wall-mounted split air conditioning systems, contributing to their sustained market growth.

Based on end-users, the global market is bifurcated into residential, commercial, and industrial. 

The industrial segment of the split air conditioning systems market is witnessing solid growth due to the surging need for efficient cooling solutions in manufacturing plants, warehouses, and other industrial facilities. These environments often require large-scale cooling systems to maintain optimal temperatures for machinery and stored goods, thereby ensuring operational efficiency and product quality. Split air conditioning systems are preferred in industrial settings because they provide targeted cooling, which is crucial for maintaining specific environmental conditions. As industries continue to grow and modernize, the need for reliable and efficient air conditioning systems is expected to grow, contributing significantly to the market's overall expansion.

Based on the distribution channel, the split air conditioning systems market is bifurcated into online and offline channels. 

The online segment of the split air conditioning systems market is rapidly expanding, fueled by the growing popularity of e-commerce and digital purchasing platforms. Consumers are choosing online channels for their convenience, wider product selection, and competitive pricing. According to a report, global e-commerce sales will reach USD 5.8 trillion by 2023, highlighting the significant shift towards online shopping. This trend is reflected in the air conditioning market, where manufacturers and retailers are leveraging online platforms to reach a larger audience and offer detailed product information, customer reviews, and easy comparison tools. Moreover, the COVID-19 pandemic has accelerated the shift to online shopping, as consumers prioritize safety and convenience.

Recent Developments

• April 2024- Samsung Electronics Singapore introduced its newest WindFree™ multi-split Air Conditioner series, which enhances Samsung's range of household appliances for smart homes. This series is meant to improve homeowners' lifestyles with its Comfort Cooling, Energy-Saving, and Connected Living capabilities.
• February 2024- Midea, a prominent international supplier of air conditioning solutions, unveiled its latest offering, the Midea IcyBlast Split AC, at the prestigious Big 5 Construct Saudi event held in Riyadh.

Analyst’s Perspective

As per the research analysts, split air conditioning systems have become indispensable within the HVAC sector, offering a balance of performance, efficiency, and comfort. As market dynamics continue to evolve, understanding the complexity of this technology and its impact on the industry is essential for stakeholders ranging from manufacturers and distributors to consumers and policymakers. Investments in research and development aimed at improving energy efficiency, durability, and user experience can help manufacturers stay competitive in the evolving landscape.

Moreover, initiatives to educate consumers about the long-term cost savings and environmental benefits of split systems can drive adoption further. By staying alongside market trends, harnessing technological advancements, and addressing consumer needs, the future of split air conditioning systems remains promising within the broader HVAC landscape.