Latin American Air Conditioning Market Remains Resilient Amidst Economic Uncertainty

Date: 10 July 2024
Latin American Air Conditioning Market Remains Resilient Amidst Economic Uncertainty
Amid economic uncertainties in Latin America due to the impact of the robust US economy and the slowdown in Chinese growth, the Air Conditioning industry shows resilience, driven by both local and international investments.

BSRIA recently conducted a comprehensive study on the Latin American Air Conditioning market to evaluate the influence of escalating political instability.

BSRIA experts scrutinized the performance of Air Conditioning markets in Chile, Costa Rica, Colombia, Dominican Republic, Ecuador, Panama, Peru, and Puerto Rico.

The findings of BSRIA's research on the LATAM region suggest that despite political turbulence and uneven economic conditions, most local Air Conditioning markets exhibited positive growth in 2023.

With the exception of Colombia, all markets experienced annual growth rates ranging from 2% to 19% in terms of units sold in 2023.

Brazil, Mexico, and Argentina continued to lead in sales volume, with 5.1 million, 1.9 million, and 1 million packaged and central plant AC systems sold respectively in 2023.

In Brazil, strong economic growth, declining inflation and interest rates, and extreme weather conditions drove demand in 2023. Residential AC sales surged as stock levels depleted towards the end of the year due to disruptions at production sites in Manaus. The success of the Brazilian residential and light commercial markets heavily relies on local production facilities in Manaus. Commercial AC sales are predominantly import-dependent, making logistics a critical factor.

Increased foreign investments, supported by American corporations' nearshoring strategies, boosted economic growth in Mexico and particularly drove commercial AC sales. Despite high interest rates in 2023, a gradual decrease in inflation enhanced consumer confidence and spending. The Mexican minisplit market expanded significantly with the introduction of a new multi-split segment, although inverter adoption remained slow. Chiller sales saw a notable increase due to investments in industrial markets and data centers.

Despite adverse economic conditions resulting in a more than 2% GDP decline in 2023, nearly all market segments experienced growth compared to the pandemic-induced slump. The residential sector remained dominant, with significant sales in high wall split units. Argentina maintained a substantial market for windows and portable AC units. Both light commercial and VRF markets grew in 2023, generating around USD 45 million. Chillers constituted a smaller segment in Argentina, reaching approximately USD 13 million in sales for 2023.

Latin American countries face climate change challenges and heightened risks of extreme weather events, prompting increased adoption of air conditioning systems.

There are notable variations in AC penetration rates across countries, leading to differing levels of maturity across product segments such as portable and mobile AC units, splits and VRF systems, rooftop and indoor packaged units, chillers, and airside equipment. While window unit sales decline, minisplits gain traction, alongside a burgeoning market for multi-splits and residential mini VRF systems. Inverter technology adoption is progressing rapidly.

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