Scorching heat and air pollution are driving sales of air conditioners and air purifiers this year in Thailand.
The steady growth of the local real estate market is another factor contributing to the industry expansion.
Demand heating up
Varut Lekajirakul, assistant general manager of marketing at Siam Daikin Sales Co Ltd, the local distributor of Daikin air conditioners, said sweltering temperatures could drive the air conditioner market to exceed 30 billion baht this year, 20% growth from 2023.
The company expects sales to hike in the first half of the year as a result of the heat.
The temperature in Thailand reached 35°C in January and 39°C in March, and is projected to remain hot and dry until mid-year.
The hot and dry season this year is forecast to last from late February until mid-May.
Temperatures are likely to be very hot in many areas, especially from mid-March to early May, according to the Meteorological Department.
The mean maximum temperature in upper Thailand is expected to reach 37°C, higher than normal by 1.0-1.5°C and 1°C hotter than last year, noted the department.
The country is also enduring the burning season, a traditional agricultural practice where farmers burn the remaining stubble and vegetation after the harvest from January to April.
The smoke from slash-and-burn farming combined with urban smog results in a toxic miasma, creating demand for air purifiers.
"The demand for air purifiers is building as the noxious smog problem worsens," Mr Varut said.
Thailand's air conditioner market was worth 28 billion baht in 2023.
Tourism recovery
He said as the tourism sector rebounds from the pandemic, hotel operators want to renovate their facilities or invest in new hotel projects, hoping to capture the boom in arrivals.
This led to a surge in demand for air conditioners, said Mr Varut.
The government expects to welcome 35-40 million foreign tourists this year.
Thailand received more than 9.3 million foreign tourists in the first quarter this year, up by 44% year-on-year, according to the Economics Tourism and Sports Division.
The air conditioner market also stands to benefit from real estate developers and retailers expanding their projects.
"No matter the outlook for the property sector, developers still have demand to build houses, both high-rise and low-rise projects," said Aphiradee Phaholvech, head of air conditioners and B2B business at Thai Samsung Electronics Co Ltd.
"This creates demand for air conditioners."
Roughly 70% of Thai Samsung's air conditioner sales are business-to-consumer, while 30% are from property developers, said Ms Aphiradee.
She said the company ramped up its production line in response to rising demand for air conditioners.
Tourists wear hats to protect against the sun while touring the Grand Palace in Bangkok on March 30. Apichart Jinakul
Headwinds ahead
Despite tailwinds from the tourism and property sectors, the country has a high level of household debt.
This means the middle class and young adults are more likely to be prudent with their spending.
The country's household debt-to-GDP ratio was 90.9% in the third quarter of 2023, according to the National Economic and Social Development Council.
Ekworaphan Jaroenwilaisuk, chief executive at S.D. Motor Compressor and Parts Co Ltd, an air conditioner dealer in Bangkok, said research centres forecast meagre GDP growth this year because of swelling household debt.
He said this could pose a challenge to the industry.
The World Bank slashed its forecast for Thai GDP growth in 2024 to 2.8%, down by 0.4 percentage points from its previous estimate.
The household debt-to-GDP ratio should decrease in the future as economic activities start to rebound and the growth of household debt slows, according to Kasikorn Research Center.
However, the ratio is unlikely to fall below 80% within five years, said the research unit.
"Scorching heat and the air pollution crisis are still expected to be crucial in driving air conditioner sales, overcoming the sluggish economy," said Mr Ekworaphan.
A Buddhist monk looks at fan units at an electrical appliance store in Bangkok on March 29. AFP
Prices stable
He said even with robust demand, the price of air conditioners has not increased because of a growing number of competitors.
Siam Daikin Sales Co Ltd introduced various promotions and marketing campaigns this hot season, highlighting energy-saving features on its products and offering extended warranties for business-to-business customers.
For its part, Thai Samsung offered longer instalment plans, up to 24 months.
Parts of Thailand have been grappling with a severe heat wave this year. AFP
20% growth outlook
Ms Aphiradee said Thailand's total air conditioner sales from January to February 2024 grew by 35% year-on-year.
For inverter air conditioners, which can adjust the compressor's motor speed to regulate the temperature, sales gained 45% year-on-year.
Last year, the air conditioner market was valued at 28 billion baht.
Thai Samsung predicted the air conditioner market would grow 20% this year.
"The company aims for sales growth in line with the market," she said.
Mr Varut said for Siam Daikin, the company is aiming for a 20% market share, up by 4 percentage points from last year.
Over the next 5-10 years, the air conditioner market in Thailand and Asia is promising as higher temperatures are likely to persist, with estimated growth of 10-20% year-on-year, said Mr Ekworaphan.
In March 2023, Thailand became the world's second-largest exporter of air conditioners after China, according to the Office of Industrial Economics.
"Apart from the rising temperatures, the middle-income segment in Asia is growing, which should help the industry to grow in the future," he said.
Mr Varut said the company expects the overall air conditioner sales in the first half of the year to increase as a result of boiling heat.