Report

Japan HVAC (Heating, Ventilation, and Air Conditioning) market is projected to witness a CAGR of 8.98% during the forecast period 2025-2032, growing from USD 19.98 billion in 2024 to USD 39.75 billion in 2032. The market has experienced significant growth in recent years and is expected to maintain an expansion in the coming years owing to rising demand for heightened indoor and outdoor air quality, growing awareness concerning air quality in both commercial and residential property, technological advancement in HVAC systems, and heightened awareness of climate change. The growing aim of energy efficiency and environmental sustainability is also projected to drive the HVAC market demand in Japan during the forecast period. As Japan continues to pursue carbon emission goals, the requirement for eco-friendly HVAC systems, including smart HVAC technologies, is on the rise. This trend is aided by the legal authorities of Japan by offering government incentives and framing favorable regulations that further foster the adoption of green HVAC technologies. In addition, the rising aging population rate is also contributing considerably to the growth of the global HVAC market as older citizens require controlled indoor environments, propelling the requirement for advanced HVAC solutions in healthcare, residential, and commercial sectors. Furthermore, rapid urbanization and a significant rise of smart cities are expanding the requirement for the integration of HVAC systems that can improve comfort, energy savings, and air quality in densely populated locations.
The government of Japan is also framing different rules and regulations and funding the infrastructure development, including state-of-the-art HVAC solutions for public and commercial buildings. Also, companies in the market are planning to set up manufacturing plants to introduce efficient and advanced parts and equipment for air conditioners and others to increase production domestically and surge overseas sales.
For instance, in January 2024, TOYO DENSEN announced to set up a specialized manufacturing plant to produce ducts, pipes, and several other parts for air-conditioning systems, coupled with installation tools and accessories to tackle the global market demand and expand their market presence.
Smart Solutions and Technological Advancements Drive the Market Growth
Technological advancements, including the integration of the Internet of Things and artificial intelligence and the introduction of smart solutions, are projected to drive the growth of the HVAC market in Japan in the forecast period. The integration of smart technologies in HVAC systems is revolutionizing the industry by providing exceptional comfort and significant savings on power costs. In addition, smart HVAC solutions also enable predictive maintenance alerts, real-time diagnostics, and integration with smart electric grids, driving the demand for the HVAC market in Japan. However, IoT-enabled HVAC systems can efficiently monitor temperature, air quality, and humidity levels, improving energy effectiveness and comfort. Furthermore, companies in the market are integrating machine learning in HVAC systems to improve energy consumption and allow proper airflow and efficiency. Not only this, but companies are also introducing different advanced models equipped with different sensors and features to expand their market presence and provide comfortable living spaces for different lifestyles.
For instance, in March 2024, Mitsubishi Heavy Industries Thermal Systems, Ltd., a part of Mitsubishi Heavy Industries, Ltd., announced the launch of 31 new models featuring different advanced sensors, AI automatic comfort mode, and others for residential-use air conditioners in the Japanese market to expand its product portfolio.
Urbanization and Smart City Development Propel HVAC Demand in Japan
Japan's rapid urbanization and smart city projects are expected to raise the demand for modern HVAC systems. The country is continually pushed to develop smart cities, which are surging the integration of advanced HVAC solutions in commercial and residential buildings, fostering Japan's HVAC market growth. Smart city initiatives by the Japanese government emphasize air quality management, energy effectiveness, and eco-friendly living, all of which are facilitated by efficient HVAC systems. In tightly populated urban locations, advanced HVAC systems are important for maintaining indoor comfort while managing energy consumption in a resource-efficient manner, fostering the Japan HVAC market demand. In addition, establishing high-rise buildings, new commercial properties, and mixed-use developments across Japanese cities are surging the requirement for HVAC systems that can efficiently handle the unique requirements of urban surroundings. The rising trend toward smart city development confirms significant Japan HVAC market growth, as developers of smart cities look to offer sustainability, easiness, and technologically advanced living spaces. Furthermore, companies in the market are introducing air conditioners to address the rising demand for HVACs in Japan.
For instance, in June 2023, Panasonic Holdings Corporation announced an increase in the production of home air conditioners in Japan, transferring some manufacturing currently in China to domestic plants. The company aims to move the production of midrange models back to Japan starting in fiscal 2024 to deliver air conditioners more quickly to the developers of smart city projects.
The Air Conditioning Segment Dominates the Market Growth
Based on the equipment, the air conditioning segment holds the largest market share in Japan HVAC market owing to climate and weather conditions, significant technological advancement, urbanization, and high population density. The manufacturers in Japan are better known for introducing highly efficient and energy-saving air conditioning units. This comprises rapid innovations, including inverter technology, which adjusts the compressor speed to lessen energy consumption while maintaining comfort. The requirement for energy-efficient systems is considerably growing across the globe, further propelling Japan air conditioning market in the forecast period. In addition, the population in Japan has a high standard of living, with significant disposable income among consumers, driving the investment in air conditioning by individuals and businesses. Companies in the market are announcing collaboration and expansion through acquisition to address the rising demand for air conditioners and expand the market size.
For instance, in March 2023, Daikin Industries, Ltd., a leading air conditioning company in Japan, announced that it would make India its biggest manufacturing hub for exports to expand sales of energy-efficient heating products and meet enough demand with its production across the region.
Southern Japan is Expected to Hold Largest Share in Japan HVAC Market
Southern Japan is expected to hold the largest market share in the Japan market for HVAC due to a significant presence of giant market players, an increase in disposable income, and rapid technological advancement. Southern Japan HVAC market demand is projected to rise due to new projects, rapid construction, and a developing economy. The investment by the Japanese government in infrastructure projects, including commercial, industrial, and residential buildings, propelled the requirement for advanced and innovative HVAC solutions. Furthermore, companies in Southern Japan are delivering high-volume HVAC systems to address the rising demand and expand their market presence.
For instance, in September 2024, Mitsubishi Electric Corporation, Tokyo announced that its Italian subsidiary Mitsubishi Electric Klimat Transportation Systems S.p.A. had received an order from Siemens AG for 1,350 Heating, Ventilation and Air Conditioning (HVAC) systems.
Future Market Scenario (FY2024-FY2031F)
- Rapid industrialization and urbanization in Japan are driving the demand for HVAC systems in new residential, commercial, and industrial buildings.
- Increased disposable incomes enable consumers to invest in advanced HVAC systems, enhancing indoor air quality and comfort.
- Environmental awareness is promoting the adoption of energy-efficient and eco-friendly HVAC systems, contributing to market growth.
- The growing number of data centers in Japan requires efficient HVAC systems to maintain optimal operating conditions, boosting market demand.
Key Players Landscape and Outlook
Companies in the Japan HVAC market are expanding their market presence and product portfolios through strategic investments in technology and partnerships. Key players like are focusing on developing advanced, energy-efficient HVAC systems to meet the growing demand for sustainable solutions. By integrating cutting-edge technologies such as smart controls and IoT connectivity, these companies are enhancing their products' performance and user experience. Collaborations with local and international partners enable them to innovate and introduce new features, ensuring they stay ahead of market trends. Additionally, active participation in government initiatives and campaigns promoting energy efficiency helps solidify their position in the market. These efforts collectively contribute to their market growth and competitiveness.
In April 2022, Carrier Global Corporation announced the acquisition of substantially all of Toshiba Corporation's (TOKYO: 6502) ownership stake in Toshiba Carrier Corporation (TCC) to offer residential and light commercial HVAC solutions and expand their market product portfolio and presence.