Russia. Central conditioning & ventilation systems regional markets 2005

CLIMATE EQUIPMENT MARKET DIVISION BY REGIONS

2.1 MARKET ESTIMATION BY AIR DUCTS

It is rather difficult to develop an adequate technique for Central Air Conditioning (A/C) & Ventilation System market size estimation in specific regions.

In order to get the adequate figures high accuracy is required in counting sales of such dissimilar equipment as chillers, AHUs, fan coils, compressor-condensing units, fans and accessories. It is hardly possible in practice. In view of the fact that some air conditioning works are performed by construction companies, air conditioner companies from various cities and foreign contractors, it is unreal to count all of them. Moreover, there are no statistic data on a number of sold units in such market segments as ventilation systems.

So, some indirect estimation techniques are needed to solve this problem. As practice shows the most representative figures can be obtained from estimations made on the basis of the number of air ducts consumed. This is the air ducts sale volume that most adequately characterizes the scope of company activities on the Central A/C & Ventilation System market.

The analysis of several dozens of the realized Central A/C & Ventilation System projects shows that air ducts account for about 25% of the total cost of equipment installed in an object. Approximately the same result can be obtained from information about Central A/C & Ventilation System sales turnover and air ducts consumption volume of specific companies. Though, these figures depend on a company's specific activities and price of equipment it deals with. In case of domestic ventilation systems the cost of air ducts can be up to 60-70% of the total equipment price. In case of Carrier Chiller and PM Luft AHU the cost of air ducts can fell to 10% of the total equipment price. Moreover, this figure depends largely on the region. The more prosperious regions consume more equipment per one sq.m of air ducts. This can be clearly seen from the table 1 comprising the data as of 2005:

TABLE 1.

Source: Litvinchuk Marketing Co.

It is noteworthy that the cost of equipment sold per one sq.m of air ducts is increasing year by year.

In most cases the error of the technique based on air duct sales estimations is not above 20%. This can be considered as a rather good result. Even in case of some errors in estimating the market capacity of the specific cities this technique allows to obtain rather adequate trends of these markets. (This statement is true as the distortions observed in estimating these markets are of the same character year by year).

It is also worth noting that the share of air ducts in the total equipment cost is dependent on the prices for air ducts established in the given region, as well as on the market structure by object types. But these parameters can be neglected in approximate estimation.

This technique gives the most adequate results in estimating the specific cities markets as it is quite possible to calculate the average volume of air ducts consumed monthly. Every big city, as a rule, has 1 to 5-7 specialized manufacturers who make on average 1,000 to 8,000 sq.m air ducts monthly for sale. These figures are rarely exceeded. Regional warehouses of big manufacturers, for example, Lissant or Rosvent are a particular case. These manufacturers are usually well-known to companies working on the local market. There are also a number of big and mid-size market players who make from 300 to 2,000 sq.m air ducts for own purposes. Normally, this segment has productivity with low technology oriented for making spare parts for a local object. And, finally, the third segment consists of “shabashniki”, illegal independent installers. In most cities they control not more than 10% of the market. An only exception is South of Russia, where their share accounts for 25-30% of the whole market.

In rare cases, big companies or holdings (including military-industrial establishments) buy air ducts for own purposes, which never enter the market. A number of air ducts are supplied by Moscow or foreign contractors for big objects they make in regions. But this is rather an exception from the rules, about which one can get information in most cases.

Thus, one can rather adequately estimate air duct volumes consumed by specific regional markets. It is worth noting that such estimation takes into account both air ducts bought by customers directly and those ones made by newly come companies as it is much more profitable to buy air ducts on-site than to supply them through hundreds of kilometers.

After all, knowing the Central A/C & Ventilation System market size and the air duct sales volume obtained in the course of the research it is quite possible to verify the adequacy of the technique.

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