HVAC-R Industry in Turkey

IndustrySouth-East European INDUSTRIAL Мarket - issue 2/2006

Tarhan SEZGIN, Export Promotion Center of Turkey

The Turkish companies involved in HVAC-R (Heating, Ventilation, Air-Conditioning- Refrigeration) products had started operating in the 50’s. Since the 50’s, except during crisis periods, The Turkish air-conditioning and heating sector has been rapidly developing both in production and capacity and the market is growing. In fact, the increase in population and living standards has resulted in the need to produce more HVAC-R products. However, the actual market development began in the late 80’s. The number of companies and the type of equipment available on the Turkish HVAC-R market increased rapidly in the 90’s. This was also in line with positive developments in the economy of the country. Today, Turkey is the fifth largest HVAC-R market in Europe. The percentage of domestic air conditioners being used is assumed to be around 2% of the total population of 73 million people.

Though air conditioning, as well as modern heating systems, is still considered a luxury by the majority of the population sales in larger urban centers or resort areas are growing.

Turkish market is wide-open

Turkish consumers, who are always looking for new products, prefer to use home-produced HVAC-R products, though the Turkish market is wide-open to all world products. This in fact, leads to the success of the Turkish HVAC-R industry. Turkish HVAC-R producers have created their own brands, which lead to tight consumer-dependence in the domestic market and these brands are gaining ground in foreign markets, mainly in the EU countries. Major brands in the domestic market are: Arcelik, Beko, Aygaz, Demirdokum, Profilo, Teba, Alarko and Vestel.

In recent years, companies in the sector have begun to form joint ventures with global firms that they had previously represented for years, thus creating technology transfer opportunities both for Turkey and the HVAC-R sector. At the same time, the corporate activities of Turkish and international investors are opening the gates of international distribution and marketing.

The sector is well organized under various associations

About 130 White Goods Parts and components supplier firms have been organized under the “White Goods Parts Suppliers Association of Turkey- BEYSAD”, and six major producers are members of the “White Goods Industrialists Association of Turkey-BESD”.

In 1993, ISKID-Turkish Air-Conditioning & Refrigeration Manufacturers’ Association was established to ensure healthy, effective and systematic development of the air conditioning sector in Turkey. Today, ISKID has 49 member companies.

The Turkish Heating/Cooling Research and Education Foundation (ISKAV) was established in December 1997. It has four purposes: to develop the HVAC market, to strengthen ties between universities and industrial establishments with a view to better-coordinated research and development, to raise the sector’s technology to European Union standards, and to educate and train qualified assembly and service technicians.

Window-type air conditioners have been replaced by split air conditioners

The Turkish HVAC-R sector has a wide range of products from heaters to split A/C systems, boilers, DX units, fan coils, air handling units, refrigerators, freezers, VRF (Variable Refrigerant Flow systems), cooling towers, chillers, cold rooms, heating and cooling coils and rooftop/packaged units, heaters and boilers. The product range is wide enough to supply world markets and satisfy sophisticated customer needs.

According to HVAC-R production statistics provided by “Turkish Air-Conditioning & Refrigeration Manufacturers’ Association” (ISKID) and the “White Goods Industrialists Association of Turkey” (BESD); window-type air conditioner production has steadily decreased to 2,000 units in 2004, while window-type air conditioner produced 10,000 units in 2001. It is known that window-type air conditioners have been replaced by split air conditioners. Mini split indoor units and outdoor units reached about 743,000 units and 722,000 units in 2004 with 90 % and 85 % growth. While previous year 28 units ducted splits were produced in 2004 the production reached 165 units.

Production of air-handling units are quite high

The production of rooftop/package units is around 348 units in 2004. Most of the production is for exports. In 2004, 341 units were exported.

The production of fan coil units has slowly increased as well in the last 3 years. In 2004, 45,662 fan coil units were produced in Turkey. The export of these goods has also improved considerably. This is probably due to the increasing number of Eurovent Certified Turkish manufacturers.

Production and domestic sales of air-handling units are quite high in Turkey. In 2004, 30 thousand air-handling units were produced in the sector. In the market there are a large number of local producers, as well as major world producers.

In sector there are very few absorption chiller unit producers but there are reasonable numbers of centrifugal chiller unit producers. Most of the chiller production is for less than 200 kW air-cooled units. In 2004, 223 units water chiller were produced. Air-cooled units are definitely the preferred types, while water-cooled units are mostly used on the large capacity applications.

In recent years, refrigerator production has had shown an upward trend. While in 2002 and 2003, production of refrigerators were 3,3 million units and 4,2 million units, in 2004 production exceeded 5,3 million units, with 24% growth.

There is a positive trend for the HVAC-R market in Turkey

All of these data in general show that there is a continuing positive trend for the HVAC-R market in Turkey. The exports at most of the above products have had a significant increase in the last years. The Split Air Conditioner domestic market has a lot of room for improvement. The central system equipment manufacture is also expected to continue growing steadily in the following years. The building sector has already shown promising signs of an increase in the need for air-conditioners in 2005.

Since Turkish HVAC-R manufacturers give high priority to innovation and new product development, research and development activities are continuously conducted. Turkish HVAC-R manufacturers are also aware of the need to continue to implement procedures necessary for the acquisition of standardization certificates of ISO Standards, CE or Eurovent-Cecomaf. Recently a large number of Turkish manufacturers have affixed the CE Mark to their products for export to the EU. At the beginning of 2003, it became obligatory to fulfill CE Mark requirements in order to sell products in the Turkish domestic market. At the same time, Turkish HVAC-R manufacturers follow international and national developments in environmental issues closely and comply with environmental legislation and regulations. As to consumer services, end-users are well served by the after-sales services of the appliance manufacturers. The HVAC-R industry follows strict legislation on after-sales services in Turkey.

Exports from HVAC-R sector in Turkey

In the last decade, the HVAC-R sector of Turkey has turned its attention to exporting its products. The high-technology used in the production process, the high priority given to research and development activities by Turkish HVAC manufacturers, the rising number of Turkish firms which have ISO Certificates and quality standards, the consideration of customer preferences during the designing phase, the consideration of the priorities of the foreign end-users, improved marketing techniques used and well-established after sales services are the reasons for the continuous growth in exports in recent years.

After the economic crisis of 2001, Turkish HVAC-R producers concentrated on the export markets. Thus, the HVAC-R industry was less affected by the crisis and the growth trend in production and exports of the sector has continued. Turkish exports of the HVAC-R industry have had an upward trend. While in 2002 and 2003, exports of the HVAC-R industry were valued at US$539 million and US$838 million, in 2004 exports exceeded US$1 billion, with 26% growth.

In 2004 the largest export product of the industry was refrigerators and freezers (US$730 million) with a share of 69%. In 2004 about 63.3 % of refrigerators and freezers production was exported. Turkish refrigerators and freezers export ranks eighth in the world exports and ranks fourth in the EU in 2004. The second largest was central heating boilers with an export value of US$ 106 million. Air conditioning machines with an export value of US$ 98 million emerged as new products for export. The others were parts of vacuum pumps, compressors, fans, blowers (2%), ventilating hoods (2%) and steam or vapour-generating boilers (2%).