In the first half of 2026, the global residential air conditioner (RAC) market declined by nearly 10% year on year. India, Japan, Southeast Asia, Europe, Australia, and Africa recorded positive growth, while China, the United States, the Middle East, and Latin America generally experienced weaker demand.Although a number of markets expanded during this period, declines in the largescale Chinese and the U.S. markets outweighed these gains, resulting in an overall contraction of the global market.Regional performances were shaped by a variety of factors, including weather conditions, inventory adjustments, reexport activities, policy changes, and shifts in production and supply chains. As a result, headline growth figures do not always fully reflect underlying market conditions.India remained one of the fastest-growing RAC markets with a year-on-year increase of about 12%. Ongoing urbanization, continued infrastructure development, and relatively low RAC penetration rates continue to support long-term market growth potential. Under the ‘Make in India’ policy, RAC import restrictions remained stringent, increasingly favoring manufacturers with local production capability and creating greater challenges for export-dependent suppliers.
Japan’s domestic RAC shipments increased by more than 19%, according to data from the Japan Refrigeration and Air Conditioning Industry Association (JRAIA). Demand was primarily driven by purchases brought forward ahead of the tightening of RAC energy effciency standards scheduled to take effect in April 2027.
Southeast Asia’s RAC market recorded growth of about 13%, supported by economic stability, hot weather, and relatively low RAC penetration rates. Most major markets in the region, including Indonesia, Malaysia, Thailand, and Vietnam, expanded. However, not all of the reported growth reflected underlying demand, as inventory recovery and reexport activities also played a role in some markets.
Europe’s RAC market recorded growth of about 6%. A historic heatwave stimulated RAC demand across the region and contributed to a sharp increase in RAC imports, particularly portable air conditioners from China. However, not all of the reported import growth reflected end-user demand, as reexport activities also contributed to performance in some markets. Australia’s RAC market grew by about 6%, with value growth outpacing volume growth as consumers increasingly opted for higher-effciency models.
Africa’s RAC market grew by about 5%, although market performance varied significantly across countries. The region has yet to see a broad-based recovery in underlying demand, with economic conditions remaining challenging in many markets. Intensifying price competition continued to reshape the competitive landscape and raise pressure on local manufacturers. China’s RAC market declined by about 17%. The impact of the national trade-in subsidy program continued to weaken, while rising raw material costs increased pressure on manufacturers and reduced the effectiveness of promotional campaigns. At the same time, the continued slowdown in the real estate sector and weak consumer confidence weighed on domestic demand.
The U.S. ductless single-split RAC market declined by about 4%, affected by high channel inventories, inflation, and tariff-related concerns. Imports of both ductless split and window types of RACs from China also continued their sharp decline, reflecting ongoing supply chain realignment. Canada also weakened,
with RAC shipments declining by 35% in the first quarter, according to data from the Heating, Refrigeration and Air Conditioning Institute (HRAI) of Canada. Following strong growth in 2025, the Middle East RAC market declined by about 34% in the first half of 2026 as regional conflicts disrupted economic activity
and trade flows. Looking ahead, reconstruction activities may support a recovery in demand once regional conditions stabilize.Latin America’s RAC market declined by about 20%, due mainly to challenging economic conditions. The shift toward local assembly using semi-knocked-down (SKD) products continued across the region.
Portable AC Boom
Portable air conditioners attracted attention as one of the fastest-growing RAC product categories. Global demand for portable air conditioners is currently estimated at about 9.5 million units per year. Their installation-free design and ability to provide immediate cooling have made them particularly attractive
in situations where split-unit installation is impractical or time-consuming. Demand increased significantly in Europe, where extreme heat and the limited availability and higher cost of split-unit installation encouraged consumers to adopt portable models.In addition, portable air conditioners have become an increasingly important product segment for manufacturers operating in markets with tariff and localization requirements, as SKD-based production and assembly models offer greater flexibility in international trade.
