Heating, ventilation, air conditioning market overview - Brief Article

Home Channel News, June 18, 2001

Weather, not housing, drives HVAC

The North American HVAC industry had difficulties in 2000 as the repair and replacement segment, which accounts for about 70 percent of sales, is governed by the weather more than anything else. A warmer-than normal winter in Q1 2000 combined with a cooler-than normal summer tended to hold down the tone of business in the segment. If this summer turns out to be a scorcher, then the numbers are likely to be quite good, comparatively speaking.

As the North American installed base of HVAC equipment has grown, the growth of the maintenance, repair and replacement market continues to accelerate. We estimate the North American market for manufacturers of residential HVAC equipment at $8.0 billion annually; for distributors, $20 billion; and for installation, maintenance and repair, $40 billion. Of total HVAC sales, 70 percent consists of repair and replacement -- this translates into an industry that is less cyclical and less coreelated to the new construction markets. Addtionally, the replacement equipment market tends to be a higher margin market compared to home building due to its purchasing power.

Size of the residential HVAC market ($ billions)
[] installation maintenance, repair  $40
[] distributing                      $20
[] manufacturing                      $8
Note: Table made from bar graph