HVAC Market Size - By Product Type, By End Use, By Installation, By Distribution Channel, Growth Forecast, 2025 - 2034

HVAC Market Size

The HVAC market was estimated at USD 310.6 billion in 2024. The market is expected to grow from USD 328.1 billion in 2025 to USD 545.4 billion in 2034, at a CAGR of 5.8%.
 

The increased adoption of energy efficient and sustainable cooling solutions is driving the market for HVAC systems. Government initiatives of implementing energy efficient cooling systems is driving manufacturers towards innovating in sustainable and energy efficient solutions of HVAC systems. Bureau of Energy Efficiency’s star rating program provides an energy efficiency-based rating system which further helps businesses and consumers in choosing energy efficient HVAC solutions. This has resulted in adoption of variable speed air conditioning system in India, which helps in achieving energy efficient cooling.
 

To cater this demand HVAC manufacturers are investing in delivering energy-efficient and sustainable solutions in the market. In 2023, Carrer announced the acquisition of Viessmann Climate Solutions for USD 13 billion. This acquisition will help Carrier expand their energy efficient HVAC product portfolio, aligning them with EU energy efficiency regulations.
 

Government regulations on energy efficiency and sustainability are driving them HVAC systems market. European Union’s energy efficiency directive which aims to achieve 27% energy savings by the year 2030. This encourages HVAC manufacturers to produce energy efficient solutions to improve their energy consumption. Fluorinate Gases and hydrofluorocarbons are commonly used as refrigerants in HVAC systems for cooling. These refrigerants are potent greenhouse gases which heavily contribute to climate change.
 

To tackle this European Union has updated their F gas regulations in 2024 and aim to reduce the use of potent greenhouse gases by 95% by the year 2050. HVAC manufacturers are now adopting natural refrigerants like R290 propane, carbon dioxide and ammonia which are less damaging to the environment compared to others. Strict government policies like these are driving the demand for efficient and sustainable HVAC solutions in the market.
 

HVAC Market Trends

• The AI and IoT technology in HVAC systems are trending in the market due to their improved efficiency and performance. The HVAC systems with IoT and AI are increasing the convenience of overall HVAC system of the buildings be improving communication between different parts of the system. This results in improved synchronization with the entire building’s HVAC system for increasing efficiency and performance.
   
• The shift towards HVAC systems with AI has led to manufacturers in developing automated HVAC systems to improve their performance while offering convenience. For instance, in 2024 Midea introduced their new residential HVAC system that featured an AI powered system to provide real-time analysis and temperature predictions to improve the efficiency of HVAC and reduces human interaction to increase convenience.
   
• The trend of sustainability is boosting the popularity of HVAC systems manufactured with sustainable materials and powered by environmentally friendly refrigerants. HVAC manufacturers are incorporating various recyclable materials like EPS which is 100% recyclable material.
   
• The rising importance of indoor air quality due to increasing pollution is trending in the HVAC market. Manufacturers are incorporating air purification systems in HVAC system components like air handling units. These help in improving air quality indoors and improves the overall indoor environment of the building.
   
• In 2023, Daikin introduced their modular air handling unit with fully automated indoor air quality management system which helps in improving the indoor air quality while providing heating and cooling features of the air handling unit.
   

Trump Administration Tariffs

• The potential tariffs on China by the Trump administration may result in supply chain disruptions as crucial HVAC system components are sourced from China. HVAC manufacturers depend on China for crucial components like compressors, sensor chips, and controller boards. The proposed tariffs by Trump administration will result in supply chain disruption and might lead to price hike in the HVAC systems as China offered affordable and consistent supply of raw materials.
   
• To tackle the effects of tariffs manufacturer are actively looking at alternative suppliers for essential HVAC components. Countries like India, Vietnam and Mexico are being preferred by manufacturers for suppliers as proposed tariffs on these countries are much lower compared to China.
   
• HVAC manufacturers need to diversify their supplier networks to tackle the dependency on single country due to changing market landscape. HVAC manufacturers might experience short-term setback in the market until the supplier situation is controlled.
   

HVAC Market Analysis

The HVAC market by product type is segmented heating equipment, ventilation equipment, air conditioning equipment, chillers, and cooling towers. In 2024, the air conditioning equipment segment dominated the market generating revenue of USD 130.7 billion and heating equipment segment is expected to grow at CAGR of around 5.7% during the forecast period 2025 to 2034.
 

• The air conditioning equipment is growing due to increased demand for sustainable and energy efficient solutions in the market. High efficiency air conditioning systems are becoming increasingly popular due to their lower electricity consumption, leading to reduced costs in long-term. The growth in urban middle class population in developing countries is increasing the demand for residential air conditioning equipment in the market.
   
• The increasing concerns of air quality is driving the demand for ventilation equipment like air handling units with air purification technology. The incorporation of active and passive filters in air handling units trending in the market as global pollution level reaches all-time high. To keep indoor air quality optimal commercial spaces are retrofitting new air handling units with air purification technology to combat poor air quality.
   
• The demand for low carbon emitting furnaces and boilers is increasing in the market due to stricter government regulations like European Union’s Green Deal which aims to transform Europe into climate neutral continent by the year 2050. Government initiatives and regulations like these are prompting manufacturers to produce low carbon heating systems and boilers.
   

HVAC market by end use is segmented into residential, commercial, and industrial. Residential segment made up 48% of the market in 2024.
 

• The expansion of urban population across the world is driving the demand for HVAC systems for residential as well as commercial uses. The rising temperatures in some regions due to climate change is increasing the adoption of air conditioning units in residential use.
   
• The infrastructure development and integration of smart technology in HVAC systems is fueling the commercial use of newer HVAC systems. Due to increasing energy efficiency standards retrofitting of new efficient and regulatory compliant HVAC systems is increasing in older commercial buildings driving the market growth.
   
• Data centers require precise temperature, humidity, and air flow for optimal operations. The heat produced in data centers requires optimal exhaust and cooling, which has increased the use of HVAC systems with connectivity and machine learning features which optimize the temperature and air flow in the data center without constant human intervention. This has led to increase in market for HVAC systems in industrial uses.
   

In terms of installation, the HVAC market is segmented into new construction and replacement/retrofit. The replacement/retrofit segment made up 53% of the market in 2024.
 

• In developed regions existing high-rise buildings need to adopt newer HVAC systems that comply with energy efficiency regulations and environmental regulations. This has increased the retrofit installation of HVAC systems in many older buildings especially in developed countries like U.S., Germany, UK, etc.
   
• The urbanization in developing countries like India and Vietnam is driving the demand for residential and commercial HVAC systems. Stricter government regulations and building codes has made it mandatory to use energy efficient HVAC systems in new buildings across the world.
   
• New commercial buildings like offices, retail malls and hospitality establishments are adopting HVAC systems to enhance the experience and indoor environment of the buildings. Poor outdoor air quality is prompting the use of air handling units and ventilation equipment with air purification technology to improve indoor air quality in commercial buildings.
   

In terms of country, the United States led the HVAC market with about 79% of the North American market share and estimated USD 88.9 billion in revenue during 2024. The expansion of the U.S. market is primarily driven by energy efficiency mandates and technological advancements.
 

• The HVAC market in the United States is increasing due to stricter energy efficiency mandates, prompting replacement of old HVAC systems with new, energy efficient and sustainable HVAC systems. To make the replacement and retrofitting affordable for low-income households the United States government under the Inflation Reduction Act of 2022, offers up to USD 2000 in tax credits for replacing older heating systems for new energy efficient and low carbon emitting heating solutions.
   
• This retrofitting and replacement of HVAC systems in old buildings across the country is driving the market for HVAC systems with smart technology like IoT which improves the synchronization between all the HVAC components in the building.
   
• The stricter regulations are increasing the adoption of efficient HVAC systems like heaters and air conditioners in the country. To reduce the environmental impact of harmful refrigerants the replacement of older cooling systems has increased. This has led to increased demand for air conditioning units with natural refrigerants like propane and carbon dioxide in the country.
   

Europe: In Germany up to 40% subsidiaries are provided for retrofitting and replacement of heating and cooling solutions in existing buildings with energy efficient and low carbon emitting solutions. This has increased the retrofitting and replacements of new HVAC systems with natural refrigerants and high energy efficiency in the country. This has prompted other countries in the European Union to offer similar subsidiaries to replace older HVAC systems with new energy-efficient and sustainable ones. The retrofitting and replacement of HVAC systems in Europe is driving the market for HVAC across Europe.
 

Asia Pacific: The increasing concern of air quality in countries like India and China is driving the demand for air handling units with air purification in the market. The AHU’s help in improving indoor air quality in commercial buildings and industrial manufacturing facilities. The rising urban population in both India and China is fueling the demand for residential HVAC systems like air conditioning. The disposable demand in the region is rising and it is fueling the demand for technologically advanced residential cooling and heating solutions that feature connectivity technology for convenient operations.
 

HVAC Market Share

• The top five companies in HVAC industry are Daikin, Midea Group, Gree Electric Appliances, Carrier Global and Trane Technologies and they collectively hold a share of 25%- 30% in the market.
   
• These companies continue to acquire and merge with others, expand facilities, and make various collaborations to increase their product offerings, access customer bases, and secure their market positions.
   
• In May 2023, Trane Technologies acquired MTA an Italian manufacturer of sustainable industrial cooling, air conditioning and air treatment solutions. This acquisition has helped Trane Technologies expand in European markets. This will also help them is sustaining their top position in the HVAC market.
   
• In March 2023, Daikin announced the acquisition of custom air handling unit manufacturer Alliance Air Products. This acquisition will expand Daikin’s HVAC systems portfolio and strengthen their position as a key player in the market.
   

HVAC Market Companies

Major players operating in the HVAC industry are:

• Bosch
• Carrier
• Daikin Industries
• Danfoss
• GREE Electric Appliances
• Haier
• Hisense HVAC equipment
• Johnson Controls
• Lennox International
• LG Electronics
• Midea
• Mitsubishi Electric
• Panasonic
• Rheem Manufacturing Company
• Trane Technologies       
   

To improve the services and market share key players are constantly investing in technological activities and are also entering into partnerships to provide improved and better solutions for the customers. These investments are benefiting both companies and customers as they help develop and offer solutions as per the changing technological trends and thus the customer requirements.
 

In 2024, Bosch announced the acquisition of Johnson Control and Hitachi’s residential ventilation businesses for USD 8 billion. This will add several new models to Bosch’s HVAC system portfolio. This will help Bosch to increase their market share in the global HVAC market.
 

In May 2023, Trane Technologies acquired Helmer Scientific a precision temperature-controlled storage and processing solutions manufacturer catering to hospitals, labs, blood banks and pharmacies. This acquisition helps Trane Technologies to expand their portfolio and strengthen their top position in the HVAC market.
 

HVAC Industry News

• In February 2025, Hisense unveiled their new variable refrigerant flow systems which feature an advanced inverter technology that increases energy efficiency of HVAC systems. The new product line is targeted at large commercial buildings that are seeking efficient HVAC solutions.
   
• In January 2024, GREE shifted their refrigerants to environmentally friendly and sustainable R32 refrigerant. This highlights their focus on a sustainable future in the HVAC market.
   
• In December 2023, Daikin inaugurated their new air conditioning systems production plant in Andra Pradesh, India. This new production facility will help Daikin in meeting growing demand in India and nearing countries. It will affirm their position as key player in the HVAC market.
   
• In October 2023, Lennox completed the acquisition of AES a HVAC services company. This acquisition will help Lennox in improving their HVAC solutions in light commercial markets.
   

This HVAC market research report includes in-depth coverage of the industry with estimates & forecasts in terms of revenue (USD Billion) and volume (Thousand Units) from 2021 to 2034, for the following segments:

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Market, By Product Type

• Heating equipment
  • Furnaces
  • Boiler
  • Heat pumps
• Ventilation equipment
  • Air handlers
  • Ductwork
  • Fans
• Air conditioning equipment
• Chillers
• Cooling towers

Market, By End Use

• Residential
• Commercial
• Industrials 

Market, By Installation

• New construction
• Replacement/Retrofit 

Market, By Distribution Channel   

• Direct sales
• Indirect sales      

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Australia 
• Latin America
  • Brazil
  • Mexico 
• MEA
  • UAE
  • Saudi Arabia
  • South Africa