Heating, Ventilation and Air Conditioning (HVAC) Market Size

Heating, Ventilation and Air Conditioning (HVAC) Market Overview

The Heating, Ventilation and Air Conditioning (HVAC) Market size was valued at USD 108083.2 million in 2024 and is expected to reach USD 131552.67 million by 2033, growing at a CAGR of 2.2% from 2025 to 2033.

The global HVAC market is experiencing significant growth, driven by factors such as urbanization, climate change, and technological advancements. In 2024, the market was valued at approximately USD 310.6 billion. The residential segment accounted for the largest share, with 39.8% of the market, followed by the commercial and industrial segments. Asia-Pacific dominated the global market with a 45.14% share, while North America and Europe held 34% and 17%, respectively. The increasing demand for energy-efficient systems and smart technologies is reshaping the industry landscape.

Key Findings

Top Driver Reason: Rising demand for energy-efficient HVAC systems due to environmental concerns and regulatory mandates.

Top Country/Region: Asia-Pacific, leading with a 45.14% market share in 2024.

Top Segment: Residential HVAC systems, holding 39.8% of the market share in 2024.

Heating, Ventilation, and Air Conditioning (HVAC) Market Trends

The HVAC market is undergoing transformative changes, influenced by technological innovations and shifting consumer preferences. Smart HVAC systems are gaining traction, with the global smart HVAC control market projected to grow from USD 10.56 billion in 2023 to USD 26.80 billion by 2032. This growth is fueled by the integration of IoT devices, enabling remote monitoring and predictive maintenance. Energy efficiency remains a central focus, with the adoption of variable refrigerant flow (VRF) systems and energy-efficient heat pumps. In 2024, over 4.12 million heat pumps were sold in the U.S., reflecting a growing preference for sustainable solutions. Europe also witnessed a surge in heat pump sales, exceeding 3 million units in 2023. The commercial sector is embracing advanced HVAC technologies, with air handling units, VRF systems, and chillers being the top products. The global commercial HVAC market is expected to reach USD 120.6 billion by 2029, up from USD 74.88 billion in 2024.

Heating, Ventilation, and Air Conditioning (HVAC) Market Dynamics

DRIVER

Rising demand for energy-efficient HVAC systems

The global emphasis on reducing carbon emissions has led to increased demand for energy-efficient HVAC systems. Regulatory mandates, such as the U.S. Department of Energy's standards and the ENERGY STAR program, are pushing both residential and commercial sectors toward high-efficiency upgrades. In the U.S., the HVAC systems market is projected to grow at a CAGR of 6.9%, driven by these stringent energy-efficiency regulations.

RESTRAINT

High initial costs of advanced HVAC systems

Despite the long-term savings, the high upfront costs associated with advanced HVAC systems can deter adoption, especially in developing regions. The integration of smart technologies and energy-efficient components increases the initial investment, posing a challenge for widespread implementation.

OPPORTUNITY

Integration of smart technologies in HVAC systems

The incorporation of smart technologies presents significant opportunities for the HVAC market. The global smart HVAC control market, valued at USD 10.56 billion in 2023, is projected to reach USD 26.80 billion by 2032. Features like remote monitoring, predictive maintenance, and energy optimization are driving this growth.

CHALLENGE

Skilled labor shortage in the HVAC industry

The HVAC industry faces a shortage of skilled labor, impacting the installation and maintenance of advanced systems. This challenge is particularly pronounced in regions experiencing rapid urbanization and increased demand for HVAC solutions.

Heating, Ventilation and Air Conditioning (HVAC) Market Segmentation

The HVAC market is segmented by type and application, each playing a crucial role in the industry's dynamics.

By Type

Residential: The residential segment held 39.8% of the market share in 2024, driven by housing starts, suburban development, and growing consumer interest in smart HVAC upgrades. Products like ductless mini-splits and smart thermostats are in demand for new constructions and retrofit projects.
Commercial: Commercial HVAC systems cater to commercial infrastructure, focusing on energy-efficient solutions and sustainable practices. The commercial segment accounted for 44% of the total market in 2023.
Industrial: Industrial HVAC services accounted for 20% of total HVAC sales in 2024, serving manufacturing facilities, warehouses, and other industrial applications.

By Application

Heating: The heating equipment segment is expected to grow at a considerable CAGR of 7.4% from 2025 to 2033, driven by the demand for efficient heating solutions in colder regions.
Ventilation: Ventilation systems are crucial for maintaining indoor air quality, especially in commercial and industrial settings. The integration of advanced ventilation technologies is enhancing system performance.
Humidity: Humidity control is gaining importance, with new AC models focusing on reducing humidity levels to improve comfort and energy efficiency.
Integrated Controls: Integrated control systems are becoming standard, offering improved energy efficiency, remote monitoring, and predictive maintenance capabilities.

Heating, Ventilation and Air Conditioning (HVAC) Market Regional Outlook

The HVAC market demonstrates significant variation across regions due to differences in climate, infrastructure development, urbanization levels, and regulatory frameworks. From the heat-intensive countries in the Middle East to the energy-conscious nations in Europe, the regional dynamics of the HVAC market shape demand, innovation, and investment patterns across both residential and commercial sectors.

North America

The HVAC market in North America is mature and highly regulated, with a strong focus on energy efficiency and sustainability. In 2024, the U.S. HVAC market alone was valued at approximately USD 31.26 billion. Residential HVAC systems dominated the market, contributing to 52% of total installations, driven by housing renovation projects and climate control demands. The demand for air conditioning remains especially high, with nearly 90% of households in the U.S. owning an AC unit. Canada has also shown increased adoption of heat pump systems due to government incentives promoting clean energy transitions. The replacement and retrofit market accounted for 55% of HVAC activities in the region, with increasing interest in smart thermostats and variable-speed compressors to lower energy usage.

Europe

Europe is rapidly becoming a leader in eco-friendly HVAC adoption, particularly heat pumps. In 2023, over 3 million heat pump units were sold in the region, representing a growth of 34% from the previous year. The European Union’s Green Deal and tightening building energy codes have significantly influenced the shift from fossil-fuel-based heating systems to renewable HVAC solutions. Countries like Germany, France, and the Netherlands are aggressively phasing out gas boilers in favor of hybrid and all-electric heat pump systems. In 2024, around 19.5 million households across Europe had installed heat pumps, with the market share expected to rise substantially by 2026. Demand is especially high in colder climates, where air-source and ground-source heat pumps are preferred for their dual heating and cooling functionality.

Asia-Pacific

The Asia-Pacific HVAC market leads globally with a 46.8% market share in 2024, driven by rapid urbanization, increased construction activity, and rising temperatures. China remains the largest contributor, accounting for over 60% of the regional demand, followed by India, Japan, and South Korea. The expanding middle class in countries like India is boosting residential HVAC system sales, with the market expected to exceed 8.9 million unit sales by 2025. Government subsidies for energy-efficient appliances, particularly in China and Japan, are further driving product upgrades. The commercial sector is also booming, supported by significant infrastructure projects, especially in Tier 2 and Tier 3 cities. Moreover, the trend toward smart homes and energy-efficient buildings is accelerating the deployment of integrated HVAC systems with automation and IoT-based controls.

Middle East & Africa

The HVAC market in the Middle East & Africa is shaped largely by climatic extremes and infrastructural expansion. The Gulf Cooperation Council (GCC) countries, particularly Saudi Arabia, UAE, and Qatar, are heavily investing in large-scale infrastructure and real estate projects that require high-performance HVAC systems. Air conditioning accounts for more than 70% of electricity use during peak summer months in cities like Riyadh and Dubai. In 2024, the demand for centralized HVAC systems in commercial real estate projects grew by 19% compared to 2022. Africa’s HVAC market is gradually expanding, led by countries such as South Africa, Nigeria, and Kenya, where urbanization and increasing construction in the hospitality and retail sectors are contributing to higher demand. However, the market still faces limitations due to inconsistent power supply and affordability concerns. Nevertheless, solar-powered and inverter-based HVAC systems are gaining popularity in off-grid and semi-urban areas.

List of Top Heating, Ventilation and Air Conditioning (HVAC) Market Companies

Zamil Air Conditioners
Daikin
Lennox International
Ingersoll Rand
Samsung Electronics
Siemens Building Technologies
Johnson Controls
Gree Electric Appliances
Honeywell International
Fujitsu General

Top Two Companies with Highest Market Share

Daikin Industries Ltd.: Daikin holds the largest market share in the global HVAC industry, with a strong footprint in both residential and commercial sectors. As of 2024, Daikin commanded approximately 17% of the global HVAC systems market, with dominant positions in Asia-Pacific, North America, and Europe. The company reported HVAC-related sales exceeding USD 30.2 billion in 2024. Its extensive product portfolio includes air conditioners, heat pumps, and ventilation systems that cater to varying climates and regulations. Daikin continues to lead in innovation through energy-efficient technologies, inverter-based systems, and integrated smart controls.
Gree Electric Appliances Inc.: Gree Electric ranks second in the global HVAC market by volume and value. In 2024, Gree reported HVAC revenue contributions of around USD 29.2 billion, driven primarily by the Asia-Pacific region and growing international sales. Known for its advanced residential air conditioning units, the company has gained significant market share through a combination of affordability, quality, and technological innovation. Gree continues to invest in next-gen cooling technologies, including eco-friendly refrigerants and AI-powered climate systems, which have helped it capture a large base in both emerging and mature markets.

Investment Analysis and Opportunities

Investments in the HVAC sector are surging globally due to the increasing demand for energy-efficient and smart climate control systems, coupled with rising urbanization, regulatory changes, and climate concerns. Governments and private firms are pouring significant capital into developing advanced HVAC solutions, especially in areas like smart building technologies, clean energy applications, and sustainable cooling systems. In the United States alone, more than $14 billion has been invested in HVAC upgrade and replacement projects as part of infrastructure modernization plans between 2022 and 2024. Approximately 55% of these investments are concentrated in residential and small commercial sectors, with the rest going into industrial climate control systems and institutional infrastructure like schools, hospitals, and government buildings. The replacement and retrofit segment represents a major investment opportunity. In 2024, over 62% of North America’s residential HVAC spending focused on replacing outdated systems with smart, energy-saving alternatives. This trend is fueled by incentives such as rebates, tax credits, and state-level green energy mandates. The U.S. Department of Energy’s 2023 efficiency standards have pushed manufacturers and contractors to align their offerings with stricter guidelines, encouraging greater investment in innovative product development. In Europe, investment is strongly aligned with sustainability goals. In Germany, France, and Italy, a combined €3.4 billion was earmarked in 2023–2024 for residential heat pump subsidies and district-level HVAC system upgrades. The European Heat Pump Association reported that over 19.5 million units had been installed by early 2024, with further demand expected due to ongoing fossil fuel phase-outs. In Asia-Pacific, public-private partnerships have led to heavy capital infusion, especially in India and China. India launched an investment initiative worth ₹6,300 crore (approx. USD 750 million) in 2024 to upgrade public housing with efficient HVAC systems. China continues to lead in HVAC manufacturing, with over 8,500 production facilities contributing to both domestic deployment and international exports. The rapid expansion of smart cities and tech-enabled housing projects is expected to attract additional FDI into the region’s HVAC ecosystem. Overall, investors are targeting three primary areas: smart automation integration, green refrigerant transitions, and urban infrastructure deployments. Technologies such as demand-responsive HVAC systems, AI-based diagnostics, and machine learning-based fault detection are becoming the focal point for venture capital and strategic alliances. The rapid pace of climate change is also compelling institutional investors to support HVAC companies that meet ESG (Environmental, Social, and Governance) benchmarks.

New Product Development

The HVAC industry is experiencing a wave of product innovation driven by demand for energy efficiency, digital control, and environmental sustainability. The new generation of HVAC systems emphasizes low energy consumption, environmentally friendly refrigerants, smart technology integration, and customizable performance settings tailored for different climates and infrastructure types. In 2024, major brands including Daikin, Carrier, and LG launched variable-speed inverter technology in their latest air conditioning units, delivering up to 35% energy savings compared to traditional systems. These new models are equipped with features like automated zone cooling, humidity control, and air purification, making them popular among both residential and commercial buyers. Indian field trials conducted in 2023–2024 revealed that dual-cooling coil models tested in six cities were able to reduce electricity usage by up to 75% during peak summer temperatures. These models also provided improved thermal comfort through the use of intelligent thermostatic expansion valves and adaptive air delivery systems. The results have spurred the development of climate-responsive AC systems, particularly suited for tropical and subtropical regions. Refrigerant innovation is another focus. Fujitsu and Gree are investing heavily in R-32 and R-290 based HVAC systems, which offer lower global warming potential (GWP) than conventional refrigerants. In 2024, more than 48% of all newly installed units in the EU used R-32, supported by upcoming legislative requirements under the F-Gas Regulation. Integrated smart HVAC systems using IoT, AI, and machine learning technologies have moved from concept to commercial deployment. As of 2024, over 35% of new residential HVAC systems sold in the U.S. came with built-in Wi-Fi controls and mobile app functionality. Smart thermostats by brands like Honeywell and Ecobee saw increased demand, with more than 14 million units sold globally in 2023 alone. In commercial buildings, new developments such as chilled beam systems, modular rooftop units, and energy recovery ventilators are transforming building climate strategies. Lennox and Johnson Controls introduced rooftop units with thermal storage capabilities in early 2024, enabling buildings to shift energy usage to off-peak hours and reduce grid strain. The convergence of green tech, intelligent software, and modular design continues to drive innovation, with manufacturers targeting product lifecycles of 15–20 years combined with plug-and-play upgradability. As user expectations shift toward personalized indoor environments, the future of HVAC product development is becoming increasingly data-driven, sustainable, and human-centric.

Five Recent Developments

Carrier Global's Acquisition of Viessmann Climate Solutions (2024): In 2024, Carrier Global completed the acquisition of Viessmann Climate Solutions, a strategic move valued at over USD 12 billion, strengthening Carrier’s position in the European residential HVAC and heat pump segment. This acquisition brought over 11,000 employees and a robust portfolio of energy-efficient technologies under Carrier's umbrella, significantly expanding its reach in renewable-based HVAC systems.
Daikin Opens New R&D Center in India (2024): Daikin launched a new R&D and manufacturing hub in Sri City, India, in early 2024. Spanning 75 acres, this facility focuses on developing next-gen inverter and energy-efficient air conditioning systems for the South Asian and African markets. The new plant has a production capacity of 1.2 million units annually and is expected to reduce manufacturing costs by 18% due to localization.
Modine Manufacturing Reports 13% Q4 Growth from Data Center Cooling (2024): Modine Manufacturing saw a 13% growth in revenue in its Q4 FY 2024 earnings report, driven primarily by its expanding data center cooling solutions. The company’s “Airedale” brand experienced record orders due to increased demand from hyperscale data centers across North America and Europe.
Trane Technologies Expands Heat Pump Production in Czech Republic (2023): Trane Technologies announced a major expansion of its heat pump production facility in Most, Czech Republic, in late 2023. The expansion increased its annual production capacity by 34%, with the company targeting the rising demand across the EU driven by energy-transition mandates. The facility specializes in low-GWP refrigerant systems and climate-friendly product lines for commercial buildings.
Johnson Controls Divests Residential HVAC Unit to Bosch (2024): In early 2024, Johnson Controls sold its residential and light commercial HVAC division to Bosch for approximately USD 8.1 billion. The divestment is part of Johnson Controls’ strategy to focus on smart building solutions and integrated systems for the commercial sector. Bosch, through this acquisition, gains a 9.4% share in the U.S. light commercial HVAC segment and is expected to scale its smart home portfolio.

Report Coverage of Heating, Ventilation and Air Conditioning (HVAC) Market

This report offers a comprehensive and data-rich overview of the global Heating, Ventilation, and Air Conditioning (HVAC) market, covering detailed market structure, trends, growth drivers, challenges, competitive landscape, segmentation, and investment activity. The scope of the report spans residential, commercial, and industrial applications, examining each in terms of product innovation, market share, regional dynamics, and technological transformation. It provides detailed insights into component-level segments, including chillers, air handling units, heat pumps, variable refrigerant flow systems, ducts, and controls. The report uses a bottom-up and top-down approach to assess market demand, offering fact-based insights supported by numeric data from 2022 through 2024. For example, in 2024, over 15.7 million HVAC units were sold in North America alone, and Asia-Pacific accounted for more than 46.8% of total market volume. It analyzes specific verticals such as hospitality, healthcare, data centers, manufacturing, education, and government buildings, which represent major areas of demand for advanced HVAC systems. Regional breakdowns are provided across North America, Europe, Asia-Pacific, and the Middle East & Africa, with facts including units sold, system adoption rates, and technology penetration. In Europe, for example, over 3 million heat pump units were sold in 2023, supported by national energy transition policies. In the Middle East, air conditioning usage represented over 70% of peak power load during summer in several countries. The report includes benchmarking of 10 key companies and profiles the top two by market dominance—Daikin and Gree. Each company is analyzed in terms of market share, product offerings, R&D direction, and innovation pipeline. Additionally, the report highlights five significant manufacturer developments from 2023 to 2024, such as Modine’s expansion in data center cooling and Trane’s earnings surge due to heat pump demand. The investment analysis section explores how global capital is flowing into smart HVAC startups and energy transition technologies, while the new product development section covers technical breakthroughs like high-efficiency compressors, eco-friendly refrigerants, and real-time climate monitoring. Overall, this report serves as a strategic tool for manufacturers, suppliers, investors, and policymakers seeking actionable insights and real-world data on where the HVAC market is today—and where it's heading tomorrow.