China has the largest share for passenger cars, followed by the United States, Japan, Germany, South Korea, and India. Improving road infrastructure and rising disposable income of the middle-class group are driving the passenger car market in the developing countries. Competitive pricing of vehicles by auto manufacturers also has created a huge demand for passenger cars in developing countries.

This spike in the automotive industry resulted in growing automobile production and the subsequent demand for features such as the air-conditioner, automatic climate control, dual-zone temperature control, etc. Also, the industry is witnessing a consumer preference toward SUVs and MPVs, which generally have an extra AC setup or vents for the convenience of rear passengers. As a whole, the progressing automotive industry is acting as a major driver for the automotive HVAC industry.

In 2018, total vehicle production has dropped by 1.1% to 95.63 million units as compared to the previous year. Passenger car sales have decreased by 3.25% to 70.57 million units and commercial vehicle sales have increased by 5.9% to 20.63 million as compared to the previous year. The governments across the globe are taking initiatives to boost the passenger car sales by revising the tax rates, managing the inventory, etc. which will further contribute toward the growth of HVAC market over the forecast period.

Owing to a huge growth in population, as well as economic development in countries, like China, India, Japan, and ASEAN countries, etc., the automotive industry in Asia-Pacific is projected to record growth at a faster pace.

According to a recent study by the International Energy Agency (IEA), passenger car ownership in India is expected to grow by 775%, from 2016 to 2040. The Indian government aims to make automobile manufacturing the main driver of ‘Make in India’ initiative, as it expects the passenger vehicles market to triple to 9.4 million units by 2026, as highlighted in the Auto Mission Plan (AMP) 2016-2026. Thus, the growing demand for cars, as well as a conducive environment for the automobile industry is expected to boost the ancillary industries, which include HVAC systems.

Also, owing to the increasing luxury car market share, foreign luxury carmakers, such as Volkswagen, Volvo, and Audi are planning to step up new investments in different countries of the Asia-Pacific region, thereby driving the advanced HVAC systems, which are required for high-end cars. A surge in the demand is expected for refrigerated vans, as cold supply chain management is also expected to witness a boost in demand.