Philippines Air Conditioning Market - Forecast(2024 - 2030)

Overview

The air conditioning market in the Philippines reached $8.45 billion in 20018, growing at a CAGR of 4.55% during 2019-2025. The changing tropical weather coupled with rising heat and humidity in the Philippines is the key driving factor for the air conditioning market. During 2015-19, the average temperature in the Philippines from April to July has increased by 28%. In addition to this, a significant proportion of untapped household has kept the opportunity to open for a low-cost air conditioner in this country. In 2018, 23%-27% of total household in the Philippines was not using any air conditioner.

Similarly, the Philippines is likely to witness a revision in Minimum Energy Performance Standards (MEPS) policy, as the same policy has not been revised since 2002. Thus, government and regulatory bodies in the Philippines have started initiating to set up new MEPS policy for air conditioning products to meet emerging emission and energy efficiency requirement. This will be likely to create a new opportunity for air conditioning products with improved MEPS standards during the forecast period.

Report Coverage

The report: “Air Conditioning Market in the Philippines – Forecast (2019-2025)”, by IndustryARC covers an in-depth analysis of the following segments of the Air Conditioning Market in the Philippines.

Key Takeaways

   · The changing tropical weather in the Philippines is accelerating the air conditioning market. The growing heatwave across the country and rising Heat Index will make the use of air conditioner inevitable in this country.

    · Split type Air conditioning products is likely to witness the highest CAGR, owing to revision in energy efficiency standards. The proposed revision in MEPS standards is likely to open new opportunity for highly efficient split type air conditioning system.

 · Approximately 23%-27% of the household in Philippine don’t use air conditioning system. Thus, air conditioning products have a higher scope of penetration from the residential segment during the forecast period.

End-User - Segment Analysis

Commercial segment dominates the air-conditioning market with 47.84% of market share in the Philippines. However, this segment is likely to witness sluggish growth during the forecast period owing to the high penetration rate in 2018. Approximately 90% of commercial establishment in the Philippines are already using air conditioning product, which results in lesser scope for air conditioning products from the commercial segment. However, residential segment is considered to be the most potential segment for Philippines air conditioning market, as 23 million of household in the Philippines still does not have any air condition products, which is approximately a quarter of the total population.

Product - Segment Analysis

Window type air conditioning products holds the majority of the market share in the Philippines, due to lesser cost and easy installation. Fixed speed window type air conditioning products alone holds approximately 60% of total air conditioning products in the Philippines. However, these products are energy inefficient, which could decline the market demand during the forecast period. The government in the Philippines is proposing a revision in MEPS for air conditioning products, which is likely to replace these inefficient air conditioning products with inverter-based split type air conditioners.

Similarly, major manufacturers such as Daikin, Carrier are initiating several awareness campaigns in this country to educate people regarding the benefit of split type inverter-based air conditioner. This program demonstrates the comparison of operating cost between split type (inverter-based) and window type air conditioner. In reality, a customer can save approximately 25% of the operating cost by using inverter-based split type air conditioners. So, these awareness programs will likely to be beneficial for manufacturers, thereby creating a new opportunity for energy-efficient air conditioning product.

Drivers – Philippines Air Conditioning Market

Ongoing proposal to revise the Minimum Energy Performance Standard (MEPS) in the Philippines:

MEPS for air conditioning products have not been changed since 2002 in the Philippines. Although many vendors have already improved their energy efficiency standards beyond the defined MEPS standards, few vendors still follow the older MEPS policy. The rising scarcity of energy and increasing environmental footprints are pushing the government and regulatory bodies to revise the MEPS standards in the Philippines. Currently, the energy efficiency ratio for 70% of air conditioning product in the Philippines is 10.447 kJ/W-h, which is approximately 14%-16% higher than current MEPS standard. There are still 30% of products, which follow the current MEPS standard. Thus, the government in the Philippines are reconsidering to change the MEPS limit. Once the MEPS is revised, the replacement demand is likely to be high for energy-efficient air conditioning product.

Changing tropical climate:

The Philippines is a tropical island, experience extremely hot and humid weather throughout the year. The situation is getting worse in this country as the temperature has been witnessing a significant rise since 2015. For instance, the average temperature in the Philippines between April to July rose from 26.110 C to 33.280 C during 2015-2019. In 2019, Philippines Government Agency PAGASA also recorded a heat index of 51.50 Celsius in Dagupan, a city in the Philippines, which is significantly high. With this growing heatwave across the country, Philippine is witnessing a surge in demand for air conditioning products.

Challenges – Philippines Air Conditioning Market

The high cost of Split air conditioning products:

Philippines air conditioning market is considered to be unique as approximately 70% market is dominated by window type air conditioner. The low cost of window type air conditioner is the primary reason for such a large adoption of this category in the Philippines. For instance, the cost of a split air conditioner is 35%-40% higher as compared to window type in the Philippines. However, the global market experience maximum demand from split type air conditioning segment. Thus, most of the key vendors have large product portfolio for split type air conditioning and comparatively less proportion for window type air conditioner. It is difficult for the vendors to introduce country-specific products, as it can add high cost to the products. Thus, vendors are facing a major roadblock in selling split air conditioning products in the Philippines.

Market Landscape

Air conditioning market in Philippine is highly fragmented with the presence of approximately 50 vendors. Carrier, Koppel, Panasonic, Kolin, and Condura are the top 5 players in the market holding approximately 45% market share. Diverse players capture the rest of the market share. Other prominent players include Daikin, LG, Mabe, GE, Midea, American Home, Everest, Fujidenzo, and Sharp. Air conditioning market in Philippines witness 60% of consumption from in-house production and 40% through import. The major players such as Carrier, Koppel, and others are focusing on introducing energy-efficient products into their existing product portfolio. Also, these players create awareness of energy-efficient air conditioning product among end-users and maintain healthy customer relationship by offering reliable and proactive service.

 Partnerships/Mergers/Acquisitions

Ø    In 2018, UTC announced to spin off its carrier business. Now, Climate, Controls & Security (CCS) segment of UTC will be called Carrier and will run as a separate entity. Carrier will have an independent strategic focus and financial flexibility to deliver customer solutions and drive long-term value.

Philippines Air Conditioning Market Research Scope:

The base year of the study is 2018, with forecast done up to 2025. The study presents a thorough analysis of the competitive landscape, taking into account the market shares of the leading companies. It also provides information on unit shipments. These provide the key market participants with the necessary business intelligence and help them understand the future of the Philippines Air Conditioning market. The assessment includes the forecast, an overview of the competitive structure, the market shares of the competitors, as well as the market trends, market demands, market drivers, market challenges, and product analysis. The market drivers and restraints have been assessed to fathom their impact over the forecast period. This report further identifies the key opportunities for growth while also detailing the key challenges and possible threats. The key areas of focus include the types of Philippines Air Conditioning market, and their specific applications in the residential, commercial, and industrial sector.