Automotive Air Conditioning Market

Rise in demand for thermal comfort is driving the market growth

Long-term growth of the automotive HVAC market is anticipated to be aided by an increase in demand for thermal comfort and an improvement in safety brought on by the use of HVAC systems. In the upcoming years, market growth may be supported by a reduction in system size and weight. The usage of HVAC systems in passenger vehicles is increasing as a result of the integration of electronics, sensors, and automated climate control features at a lower cost. Increased vehicle electrification will probably lead to a greater integration of cutting-edge comfort and safety features.

Players' offers and technological capabilities are expected to improve as a result of technology advancements and significant investments in R&D projects. In addition, the development of less expensive HVAC systems and the use of eco-friendly refrigerants offer participants in the automotive HVAC market excellent growth prospects. Major manufacturers are putting cutting-edge HVAC systems in cars to combat tiny particles in the cabin.

The requirement for the product to improve the customer experience is anticipated to increase with the rising demand for private automobile rental services like Ola, Uber, and Lyft. Additionally, it is anticipated that increased competition among taxi services will make it easier to use the emerging service distinction, boosting client loyalty.

Over the course of the forecast period, rise in the middle class, rising consumer income levels, and shifting lifestyles are anticipated to drive the market for vehicle air conditioning systems. Growth is projected to be aided by the rising global demand for automobiles and the increased efforts being made by manufacturers to increase interior comfort.

Rapid industrialization has increased air pollution levels across a number of economies. For instance, the economy's increased need for air conditioning systems is a result of Beijing's very hazardous air. The air inside the vehicles is filtered by cutting-edge cooling systems, reducing the risk of airborne infections. Over the next seven years, usage of the product in cars is anticipated to increase due to high commuting populations in various economies and growing travel distances.

Auto windows that are closed reduce wind resistance, which enhances vehicle efficiency. Additionally, it enhances its acceleration and pick-up, which increases demand. Technologies that demand less fuel to operate the air conditioning systems have been made possible by growing knowledge of energy efficiency. In order to lower vehicle operating costs and improve sustainability, the manufacturers have been creating eco-friendly and effective technology. Thus, driving the Automotive Air Conditioning market revenue.

The Global Automotive Air Conditioning Market Industry is projected to experience substantial growth in the coming years. With a market valuation of 36.3 USD Billion in 2024, it is anticipated to reach 64.4 USD Billion by 2035, reflecting a robust compound annual growth rate of 5.36% from 2025 to 2035. This growth trajectory indicates a strong demand for automotive air conditioning systems, driven by various factors such as technological advancements, consumer preferences, and regulatory changes. The market's expansion is likely to create opportunities for innovation and investment, positioning it as a key segment within the automotive industry.

The Global Automotive Air Conditioning Market Industry is experiencing growth due to the increasing production of vehicles worldwide. In 2024, the market is valued at 36.3 USD Billion, driven by the demand for passenger and commercial vehicles. As manufacturers ramp up production to meet consumer needs, the integration of advanced air conditioning systems becomes essential for comfort and efficiency. This trend is expected to continue, with projections indicating that by 2035, the market could reach 64.4 USD Billion. The anticipated compound annual growth rate of 5.36% from 2025 to 2035 further underscores the importance of air conditioning systems in modern vehicles.

Technological innovations play a pivotal role in shaping the Global Automotive Air Conditioning Market Industry. The introduction of energy-efficient systems and environmentally friendly refrigerants reflects a shift towards sustainability. Advanced climate control technologies, such as dual-zone and tri-zone systems, enhance passenger comfort and are increasingly being adopted in new vehicle models. These advancements not only improve user experience but also comply with stringent regulations regarding emissions and energy consumption. As consumers become more environmentally conscious, the demand for vehicles equipped with state-of-the-art air conditioning systems is likely to rise, contributing to the market's growth trajectory.

Consumer preferences are significantly influencing the Global Automotive Air Conditioning Market Industry. As individuals prioritize comfort during travel, the demand for efficient and effective air conditioning systems in vehicles is on the rise. Features such as automatic climate control and air filtration systems are becoming standard in many new models. This shift in consumer expectations drives manufacturers to invest in advanced air conditioning technologies, ensuring that vehicles meet the evolving needs of their customers. The growing emphasis on passenger comfort is expected to sustain market growth, as manufacturers strive to enhance the overall driving experience.

Emerging markets and urbanization are driving forces behind the Global Automotive Air Conditioning Market Industry. As urban populations grow, the demand for personal and public transportation increases, leading to a higher need for efficient air conditioning systems in vehicles. Countries in Asia-Pacific and Latin America are witnessing rapid urbanization, resulting in a surge in vehicle ownership. This trend is expected to continue, with manufacturers focusing on these regions to expand their market presence. The growing middle class in these areas is likely to prioritize comfort features, including advanced air conditioning systems, further propelling market growth.

Regulatory standards and environmental concerns are increasingly shaping the Global Automotive Air Conditioning Market Industry. Governments worldwide are implementing stricter regulations regarding vehicle emissions and energy efficiency, prompting manufacturers to adopt more sustainable practices. The transition to low-GWP (Global Warming Potential) refrigerants is a direct response to these regulations, as companies seek to minimize their environmental impact. This shift not only aligns with global sustainability goals but also enhances the market appeal of vehicles equipped with eco-friendly air conditioning systems. As regulations evolve, the market is likely to adapt, fostering innovation and growth in the automotive air conditioning sector.

By region, the study provides market insights into North America, Europe, Asia-Pacific and Rest of the World. The Asia Pacific Automotive Air Conditioning market, dominated this market in 2022 (45.80%), due to the increased manufacturing and consumption of vehicles, as well as the presence of important enterprises in the area. The extensive road network in nations like India, China, and Japan has raised demand for automobiles. Moreover, China’s Automotive Air Conditioning market held the largest market share, and the Indian Automotive Air Conditioning market was the fastest growing market in the Asia-Pacific region.

Further, the major countries studied in the market report are The US, Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 2: Automotive Air Conditioning Market Share By Region 2022 (USD Billion)

Source: Secondary Research, Primary Research, Market Research Future Database and Analyst Review

The North America Automotive Air Conditioning Market is expected to register significant growth from 2023 to 2032. Customers must upgrade automotive thermal system components frequently due to stringent local environmental rules and government standards, which is also anticipated to boost the market. Further, the U.S. Automotive Air Conditioning market held the largest market share, and the Canada Automotive Air Conditioning market was the fastest growing market in the North America region.

Europe Automotive Air Conditioning market accounted for the healthy market share in 2022. Growth is anticipated to be aided by a shift in consumer preferences toward environmental management and a rise in the need for efficient and portable HVAC systems in the area. Further, the German Automotive Air Conditioning market held the largest market share, and the U.K Automotive Air Conditioning market was the fastest growing market in the European region.

Leading market players are investing heavily in research and development in order to expand their product lines, which will help the Automotive Air Conditioning market, grow even more. Market participants are also undertaking a variety of strategic activities to expand their global footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. To expand and survive in a more competitive and rising market climate, Automotive Air Conditioning industry must offer cost-effective items.

Manufacturing locally to minimize operational costs is one of the key business tactics used by manufacturers in the Automotive Air Conditioning industry to benefit clients and increase the market sector. In recent years, the Automotive Air Conditioning industry has offered some of the most significant advantages to medicine.

Major players in the Automotive Air Conditioning market, including Denso Corporation, Hanon Systems, Mitsubishi Heavy Industries Ltd., MAHLE GmbH, Valeo SA, Keihin Corporation, Calsonic Kansei Corporation, Samvardhana Motherson Group, Subros Limited, and SMAC Auto Air, are attempting to increase market demand by investing in research and development operations.

Automotive thermal management systems are produced by Hanon Systems (Hanon), a division of Hahn & Co Auto Holdings Co Ltd. It creates, produces, and sells products for controlling the climate in automobiles. It Compressors, powertrain cooling modules, thermal and energy management products, emission products, and heating, ventilation, and air conditioning (HVAC) modules and systems are among the company's goods. Refrigerant lines, metal seal fittings, accumulators, water-cooled transmission oil coolers, air charge air coolers, fragrance systems, and versatile HVAC are all among the company's goods. 

Additionally, it provides UV (ultraviolet) LED photocatalyst, traditional blade fans and motor assemblies, variable displacements, better drainage, and coated evaporator core goods. Hanon manufactures items specifically for the automotive industry. The business has operations in the Americas, Europe, South Asia, and Asia.

The headquarters of Hanon are in Daejeon, South Korea. Hanon System opened two new facilities in Hungary in November 2021: a building expansion in Rétság and a brand-new greenfield industrial plant in Pécs. The facility has 22,464 square meters of production area and has room for assembly lines, testing for automobile air conditioning (A/C) lines, and equipment for forming, brazing, welding, and bending.

Automotive supplier and partner Valeo SA (Valeo) works with automakers. It creates, manufactures, and sells CO2 emission-reducing parts, integrated systems, and modules as well as provides and distributes replacement parts to automakers and independent aftermarket operators. In addition to powertrain solutions, systems, modules, and components to regulate the thermal energy of the powertrain, the company also develops and manufactures interface systems between the driver, the vehicle, and the environment, visibility systems, and powertrain solutions. 

Worldwide, Valeo provides services to original equipment manufacturers and automakers. Asia, Africa, South America, the Middle East, North America, and Europe are all commercial hubs for the corporation. The headquarters of Valeo are in Paris, France. In August 2021, Valeo unveiled the New Valeo heat pump, which uses a natural refrigerant and gets two-thirds of its energy from outside air to reduce the need for onboard batteries. At -15°C, the device allows EVs to go up to 30% further than those outfitted with more traditional heating systems.