Globally, the demand for electric motors used in heating, ventilation, and air conditioning (HVAC) and in other white goods such as washing machine is likely to witness higher revenue growth. This article, by Frost and Sullivan, takes a closer look at this prediction, as follows.
In 2015 low inflation level that prevailed in many regions (such as Western Europe, Central & Eastern Europe, China, India, Brazil, and Argentina) across the globe, and this low inflation enhanced the purchasing power of consumers. As oil price is expected to remain below $50 per barrel (or even lesser than that) in 2016 and 2017, inflation is likely to remain low during 2016 and 2017. As a result, the purchasing power of consumers in these regions is expected to be high. This trend is expected to increase the demand for personal care products such as electric shaver or trimmer, and hair dryer, HVAC equipment and other white goods such as, washing machines, and vacuum cleaners.
The share of urban working population is expected to increase from 2016 to 2020 in emerging economies such as China, India, Southeast Asia, Brazil, Argentina, Turkey, and Eastern Europe. The lesser time available with the working population for daily chores such as washing clothes and utensils is expected to increase the adoption of washing machines in these regions. This trend is expected to increase the demand for motors used in washing machines.
AC induction motor or shaded pole motors integrated with motion controller, that offer higher efficiency and flexible wash functionality are likely to be highly adopted in washing machines during the forecast period (2016 to 2020).
During the forecast period, brushless direct current (BLDC) motors are expected to be used in a plethora of household appliances such as juicers, rotating plate of microwave ovens, vacuum cleaners, and clothe washers with power rating of less than 500W. Some of the factors that influence higher adoption of BLDC motors are their low operational noise, high efficiency, and low maintenance cost.
Growth in number of new buildings
The growth in the number of new buildings that are constructed across the globe has remained steady since 2011. Higher rate of urbanization (more than 2.5% annual growth in urban population) in countries such as India, China, Bangladesh, Bhutan, Vietnam, the UAE, Saharan Africa, and West Africa is expected to increase the demand for household appliances (such as washing machine, and HVAC equipment) in these countries during the forecast period. This is because countries with higher rate of urbanization have higher growth rate of number of residential buildings. The demand for electric motors used in these household appliances is likely to be from the production facilities located in India, China, Turkey, and South Africa.
Existing buildings refurbished with HVAC equipment
The tropical climate in South Asia, Saharan, and sub-Saharan Africa and the high per capita gross domestic product (GDP) growth rate in countries such as China (6.7%), India (6.0%), Vietnam (4.8%), Bangladesh (4.8%), and Malaysia (4.4%) are expected to drive households in these regions to purchase HVAC equipment.
In order to cater to this increasing demand for HVAC equipment, HVAC original equipment manufacturers (OEMs) based out of Italy, China, Japan (such as Daikin, Mitsubishi Electric, Hitachi), South Korea (such as Samsung, LG), and the United States have been establishing manufacturing units in India since 2011, and this trend is expected to continue during the forecast period also. The demand for motors from these manufacturers is expected to grow drastically from 2015 to 2020 due to huge growth expected in the sales of HVAC equipment in South Asia. Many HVAC OEMs located in South Africa are likely to purchase motors used in these equipment, in order to meet the expected growth of demand in sub-Saharan Africa during the forecast period.
Energy-efficient motors to reduce Carbon emission
The 2015 Paris climate deal is expected to usher in a new era of carbon emission reduction, as this deal also includes developing economies to reduce their share of emissions. In order to comply with new regulations and to brand themselves as green companies, HVAC OEMs in developing countries and developed economies are likely to purchase motors with premium energy-efficiency rating (International Efficiency-3 i.e. IE3 or above). However, the higher cost of premium efficiency motors can pose a challenge for motor manufacturers or HVAC OEMs in selling this type of motors or HVAC equipment respectively. Some of the reasons why this challenge will be taken care of by itself are as follows. The Conference Of Parties (COP) 21 deal or the Paris climate deal is expected to increase the share of renewable energy (out of total electricity generation) in the developed countries (such as the United States, Canada, Japan, Germany, France, Italy, the UK, and Australia), and developing countries (China, India, Brazil, and Argentina). Higher share of renewable energy is expected to increase the electricity cost throughout the world. Since motors consume approximately 50% to 60% of energy in all household appliances with motors, using motors with premium or super premium energy-efficiency will reduce the electricity consumption significantly and lower the total electricity cost. Therefore, more end users are expected to pay extra price for household appliances with premium or super premium efficiency motors. Hence, the demand for premium efficiency motors is expected to favour motor manufacturers by increasing their revenues. While increasing rate of urbanization, and rise in per capita GDP in emerging economies are expected to increase the demand for household appliances and in turn the demand for motors, the newfound global consensus to curb greenhouse gas emissions before 2050 is expected to influence consumers to invest in higher priced premium efficiency motors. Summarily, the household appliance market for electric motors is expected to have a bright future from 2016 to 2020.
