Source: CHEAA-run China Appliance magazine
China’s home air conditioner industry reached a historic milestone in the 2025 cooling year (August 2024-July 2025) — for the first time, annual production and shipment volume surpassed 200 million units. This was driven by both domestic and overseas demand, with the domestic market standing out thanks to the trade-in policy.
At the beginning of the 2025 cooling year, China’s domestic air conditioner market was weighed down by heavy channel inventories. The introduction of the trade-in policy swiftly resolved the inventory overhang. Leading manufacturers were quick to capitalize on this policy tailwind, rolling out large-scale promotional campaigns that shattered the industry’s traditional distinction between peak and off-peak seasons. Some industry experts even argued that the sector should no longer be analyzed strictly through the conventional cooling-year cycle.
After the 2025 Spring Festival, the trade-in policy was further relaxed, raising the purchase limit from one subsidized air conditioner per consumer to three. This move gave consumer demand an additional boost. The market was fully stimulated. Domestic sales entered a period of explosive growth that lasted through the end of the cooling year.
According to shipment data from ChinaIoL.com, domestic shipments of home air conditioners in the 2025 cooling year reached 110 million units, up 10.8% year-on-year, compared with a 1.2% decline in the previous period. Data from AVC indicates that total retail sales across all channels in China stood at 257.2 billion yuan, up 17.1% year-on-year.
The overseas market also delivered strong results, providing a powerful boost to China’s home air conditioner industry. In the first half of the cooling year, demand remained robust across Europe, Southeast Asia, and South America. Exports from China continued the high-growth trajectory of the past two years, achieving 20 consecutive months of double-digit year-on-year expansion. This boom was underpinned by years of sustained investment in R&D, manufacturing, and global market development by Chinese producers. Although export growth slowed sharply in the second half due to tariff disputes and weaker restocking demand, data from ChinaIoL.com shows that full-year exports still reached 99.29 million units, up 16.7% year-on-year. For the second consecutive year, exports accounted for nearly 50% of total output and sales. Coupled with the ongoing expansion of Chinese manufacturers’ overseas production bases, the dual-engine growth pattern of domestic and international markets has now taken firm shape.
Fueled by strong momentum from both domestic and overseas markets, China’s home air conditioner industry surpassed the 200 million unit mark for the first time. Multiple data sources indicate that total shipments in the 2025 cooling year exceeded 210 million units, reflecting year-on-year growth of over 13% — a landmark milestone in the industry’s history.
At the same time, China’s total domestic production capacity for home air conditioners surpassed 300 million units, underscoring the persistent problem of overcapacity. With the adoption of digital manufacturing and other efficiency-enhancing tools, as well as fluctuating market demand, this challenge is likely to become even more pronounced.
From the data, it is clear that both domestic and overseas demand are entering a period of adjustment after high growth. On the one hand, the strong growth in 2025 was partly due to the low base in the previous year. With the boost from the trade-in policy and concentrated demand release, sales grew sharply, but this creates significant pressure for growth in 2026. On the other hand, demand has been front-loaded: after a wave of heat waves, policy stimulus, and promotions, many consumers have already upgraded their units, leaving less room for short-term growth.
In the domestic market, as the trade-in program winds down and local subsidies tighten, demand will gradually return to rational levels. Relying on policy incentives to drive sales will no longer be sustainable. In overseas markets, inventory corrections also mean greater pressure on exports. Under these conditions, it will be difficult for the industry to maintain strong growth in the 2026 cooling year, and companies need to prepare for headwinds.
The domestic market shows encouraging signs. Channel inventories for home air conditioners have returned to normal, providing room for steady production and shipments. Unusually high temperatures in Northeast China have spurred fresh demand, creating short-term market opportunities. Furthermore, after more than a year of promotion and market education under the trade-in program, consumers’ awareness of innovative features—such as health, smart functionality, and energy efficiency—has significantly increased. The concept of replacement demand has evolved: buyers are no longer satisfied with basic cooling and heating, but increasingly value health, smart features, and energy efficiency. This shift lays the foundation for competition driven by product innovation.
For manufacturers, the key lies in leveraging differentiated technological innovation and strategic positioning to capture opportunities arising from structural market shifts.
In terms of technological innovation, health-oriented functions, as well as AI large models, are emerging as key drivers for the future development of the air conditioner industry. As consumers’ demand for health and smart functionality continues to grow, these technology-driven products are expected to become new growth points in the structural upgrade of the air conditioner market.
Looking ahead, companies face multiple pressures in the new cooling year: demand corrections, policy rollbacks, intensified competition, and the drag from last year’s high base. A decline in production and sales is almost inevitable. The challenge will be striking a balance between short-term pressures and long-term opportunities.
In the long run, the tech-driven upgrade of domestic consumption and the growing global recognition of Chinese brands will continue to underpin the industry. As climate change brings increasingly severe heat, air conditioners will remain essential to human life, ensuring vast long-term market potential. The hope is that China’s air conditioner manufacturers can weather the current demand adjustment and sustain healthy growth.