Market evolution: Split air conditioners (CN 84151090) — 2015–2025

Introduction

The EU market for split-system air conditioning machines (CN 84151090) has undergone a dramatic transformation between 2015 and 2025. Driven by rising cooling demand—linked to increasingly frequent heat waves, the energy transition away from fossil-fuel heating, and growing household adoption across Southern and Eastern Europe—EU imports nearly quadrupled in volume over the period, while domestic production expanded only modestly. The result has been a sharp increase in the EU's external dependency and a structural trade deficit that grew from approximately €676 million to over €2.6 billion. This report examines the key dynamics behind this evolution, from overall demand growth and supply concentration to intra-EU geographic shifts and vulnerability indicators.

The analysis draws on EU-level trade data (extra-EU flows), production figures from the trade dashboard, and concentration and vulnerability metrics covering the full 2015–2025 window.

1. A Market Transformed: Explosive Import Growth and a Deepening Trade Deficit

1.1 Import volumes nearly quadrupled while prices remained broadly flat

EU extra-EU imports of split air conditioners surged from €743 million in 2015 to €2.77 billion in 2025—a 273% increase in value. In volume terms, the growth was even more striking: imported quantities rose from 96,003 tonnes to 371,209 tonnes (+287%). Despite this massive volume expansion, the unit import price actually declined slightly from €7,739/t to €7,473/t (−3.4%), indicating that the surge was driven primarily by quantity rather than price effects. This suggests highly competitive global supply and efficient scaling by Asian manufacturers.

1.2 EU exports grew but remain an order of magnitude smaller

EU exports of split air conditioners also expanded, rising from €66.6 million to €123.1 million in value (+84.8%) and from 5,105 tonnes to 8,475 tonnes in volume (+66.0%). Unlike imports, export unit prices increased by 11.3% (from €13,052/t to €14,525/t), suggesting that EU-based exporters focused on higher-value segments. Nevertheless, exports remained less than 5% of imports by value, highlighting the EU's fundamentally import-dependent position.

1.3 The trade deficit widened nearly fourfold

The trade balance deteriorated from −€676 million to −€2.65 billion. The net import reliance ratio nearly doubled, climbing from 34.1% to 67.2%, meaning that roughly two-thirds of the EU's apparent consumption of split air conditioners is now met by imports. The trade intensity of the product also rose sharply, from 45.5% to 76.8%, underscoring the growing openness—and exposure—of the EU market.

1.4 EU production expanded in volume but lagged in value

EU production data shows that the number of units produced within the EU rose from approximately 1.08 million to 2.50 million (+131% in quantity), yet production value increased only 13.3% (from €1.01 billion to €1.14 billion). This implies a significant decline in the average value per unit produced domestically, consistent with increasing competition from lower-cost imports forcing EU manufacturers into tighter margins or shifting their product mix.

2. China's Dominance and Rising Supply Concentration

2.1 China consolidated its position as the overwhelmingly dominant supplier

The single most defining feature of the EU's import structure for split air conditioners is the dominance of China. Chinese exports to the EU grew from €474 million in 2015 to €2.15 billion in 2025, a 353% increase. By 2025, China accounted for approximately 77% of all EU imports of split air conditioners by value—a share that has grown steadily over the decade.

2.2 Import concentration intensified, narrowing the supplier base

The Herfindahl-Hirschman Index (HHI) for import concentration by value rose from 4,559 in 2015 to 6,210 in 2025—a 36% increase. An HHI above 2,500 is generally considered a highly concentrated market; at 6,210, the EU's import supply for this product is extremely concentrated. The rise was driven almost entirely by China's growing share, while several traditional suppliers (Japan, Malaysia, the UK) saw their share decline.

2.3 Türkiye emerged as a new significant supplier

One of the most notable shifts was the emergence of Türkiye as a meaningful source of EU imports. From a negligible €213,000 in 2015, Turkish exports to the EU surged to €130 million by 2025—an extraordinary 60,879% increase. This likely reflects both the relocation of some production capacity to Türkiye (benefiting from its Customs Union with the EU and proximity) and Turkish manufacturers' growing competitiveness. Türkiye's volatility coefficient (0.63) remains moderate, but this is still a relatively young and fast-evolving trade relationship.

2.4 Thailand remained the second-largest supplier with high volatility

Thailand held its position as the EU's second-largest source of imports, growing from €155.4 million to €380.0 million (+145%). However, Thai import flows showed meaningful volatility (coefficient of variation of 0.24), and the value peaked at €512.5 million before declining, suggesting some supply-chain adjustments. Malaysia and Japan, by contrast, saw their import values decline over the period, indicating a loss of EU market share to China and Türkiye.

3. Intra-EU Dynamics: Southern and Eastern Europe at the Forefront

3.1 Mediterranean and Balkan EU members drove the import surge

The import growth was not evenly distributed across EU member states. Southern European countries experienced the most dramatic increases, consistent with the rising frequency and intensity of summer heat waves in the region:

Spain and Greece stand out with import growth exceeding 560%, reflecting both climate-driven demand and the broadening adoption of split-system air conditioning in markets where penetration was historically lower. The Netherlands' extraordinary 1,740% growth likely reflects its role as a logistics and redistribution hub (e.g., the Port of Rotterdam) rather than purely domestic consumption.

3.2 EU exports remained niche, concentrated in nearby European markets

EU export destinations were dominated by neighbouring non-EU European countries:

These destinations suggest that EU-based manufacturers or distributors primarily serve high-income nearby markets (Switzerland, Norway) and Western Balkan countries with close geographic and regulatory ties. The export propensity of EU production rose from 11.2% to 23.8%, indicating that a growing share of what is produced in the EU is destined for export—likely reflecting supply-chain integration with neighbouring countries rather than a broad competitive advantage in global markets.

3.3 Export concentration remained low, but import concentration shifted geographically

The HHI for exports remained low (508 to 681), reflecting a diversified set of export destinations. By contrast, import concentration (HHI 4,559 → 6,210) increased significantly, driven by China's growing dominance. Within the EU, specialisation data reveals that smaller, often Southern or Eastern EU members (Croatia, Greece, Slovenia, Lithuania, Estonia) show the highest revealed comparative advantage in this product, while large economies like Ireland, Denmark, Sweden, and Belgium are the least specialised—consistent with climate-driven demand patterns.

3.4 Price shocks were sporadic but noteworthy

The shock analysis detected several price anomalies:

• A notable export price shock to the United Kingdom in 2019 (abnormality score: 91.5, price shift: +26.1%), coinciding with Brexit-related trade uncertainty and sterling depreciation, which may have affected EU–UK pricing dynamics.
• An export price shock to Türkiye in 2019 (abnormality: 17.5, shift: +88.2%), possibly linked to the Turkish lira crisis of 2018–2019 and subsequent currency-adjusted pricing.
• A smaller export price shock to Moldova in 2022 (abnormality: 10.5, shift: +29.9%), potentially reflecting post-COVID supply chain disruptions or regional energy price pass-through.

Among import partners, Malaysia showed the highest volatility (coefficient of variation: 1.01), followed by Switzerland (0.93) and Israel (0.71), indicating that flows from these sources were the most unstable over the period.

Conclusion

The EU's split air conditioning market has been fundamentally reshaped over the 2015–2025 decade. Total imports nearly quadrupled in volume, driven by rising domestic demand linked to climate trends and the electrification of heating and cooling. This growth was overwhelmingly supplied by China, whose share of EU imports reached approximately 77% by value, pushing import concentration (HHI) to very high levels. The EU's net import reliance nearly doubled to 67%, creating a structural dependency on a single dominant supplier—a pattern that raises important questions about supply-chain resilience, particularly in the context of the EU's broader strategic autonomy agenda.

At the same time, some diversification signals are emerging: Türkiye rapidly grew from a negligible supplier to a €130 million source of imports, and EU export propensity doubled, reflecting deepening integration with neighbouring European markets. EU production expanded in unit terms but lost ground in per-unit value, suggesting increasing competitive pressure from Asian manufacturers.

Looking ahead, the interplay of climate adaptation needs, energy-efficiency regulations (such as the F-gas regulation and ecodesign requirements), and potential trade policy responses will shape whether the EU can rebalance its position—or whether the import dependency will continue to deepen.