The air-conditioning industry, which experienced rapid growth in 2017, is now facing new challenges in 2018. Recent data shows that from late 2017 to early 2018, air conditioner sales have slowed down and even seen negative growth compared to the previous year. With factors such as real estate regulations, overcapacity, and intensified competition, the industry is expected to face a difficult period in 2018, moving away from last year’s high-growth trend into a phase of adjustment.
**Air Conditioner Sales Growth Slowed in the Last Two Months**
According to recent online industry data, air conditioner sales reached 8.16 million units in November 2017, marking an 8.47% year-on-year increase. Among these, 5.82 million units were sold domestically, rising by 10.13% year-on-year. For the first 11 months of 2017, total industry sales amounted to 132 million units, up 32.1% compared to the same period in 2016. Domestic sales totaled 82.26 million units, showing a significant 48.7% increase. However, the growth rate of domestic sales has started to slow down.
Zhongyikang statistics reveal that during the 49th to 52nd weeks of 2017, offline retail sales for air conditioners fell by 4.6%, a sharp contrast to the 5.3% growth recorded in the first 48 weeks of the year. This slowdown indicates that the air conditioning market faced a disappointing end to 2017.
Some manufacturers noted that after the National Day holiday in 2017, signs of declining sales had already emerged. The slight increase in November was partly due to the Double Eleven shopping festival and channel stock replenishment, which temporarily boosted shipments. However, most of these units were stored in distribution channels rather than sold directly to consumers.
**High Inventory Risk in the Air Conditioning Industry Remains Unresolved**
Unlike other home appliances, high inventory levels have long been a concern for the air conditioning industry. In 2014, when daily inventory reached 40 million units, it led to aggressive price cuts and intense competition among major players.
As of the end of October 2017, the total industry inventory stood at 32.3 million units, with 24.02 million units in channel stock — still relatively manageable. However, Zhang Yanbin, Dean of the AVC Air Conditioning Industry Research Institute, warned that the slowdown in domestic sales could lead to higher inventory risks in 2018 if exports face obstacles. Yang Jie, Chairman of Industry Online, also emphasized that while China's household air conditioners are expected to continue growing, companies must remain cautious during expansion.
In 2017, Qingdao Haier announced plans to add 15 million air conditioning units in capacity, while Changhong Air Conditioning invested 1.09 billion yuan to build a 4.2 million-unit production base in Mianyang, Sichuan. Oaks Air Conditioning also revealed that its new smart factory would reach an annual output of 7 million units. Meanwhile, compressor manufacturers reported record-high production and sales in the final two months of 2017, indicating that air conditioning manufacturers are accelerating their output.
**Enterprises Are Targeting Smaller Cities and Towns as New Growth Markets**
While the overall market is expected to struggle in 2018 due to slowing real estate sales and strong demand in 2017, there are still opportunities for growth. Zhang Yanbin pointed out that there is a significant gap between urban and rural air conditioner penetration rates. Currently, urban areas have 124 air conditioners per 100 households, compared to just 48 in rural regions. If rural areas reach urban levels, the market could expand by over 100 million units.
For example, one brand announced in early 2018 that it would focus on underdeveloped markets, strengthening third- and fourth-tier cities through channel innovation. Another company highlighted its efforts to deepen and broaden offline networks to drive a "spiral-up" upgrade. During the June 18th promotion, JD.com also unveiled an aggressive strategy to expand into rural areas. These developments suggest that smaller towns and cities may become key drivers of future growth in the air conditioning sector.
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