Daikin to add A/C compressor plant in Thailand

Jul 07, 2016

Air conditioner maker Daikin Industries will boost production capacity for compressors in Thailand as it braces for hotter competition.

The Osaka-based company will spend nearly 5 billion yen ($49.3 million) to add a plant for residential air conditioner compressors at an existing site of Daikin Compressor Industries, a subsidiary in the southern province of Rayong. The plant now produces 2 million compressors a year and has been operating at full capacity since last fall.

Daikin decided to move up its ramp-up schedule at the site by 18 months to raise annual output to 2.75 million units by this autumn and 3.5 million by early 2018. The plan is to ship compressors to air conditioner plants in Thailand, Malaysia, India and elsewhere to make finished products available across Southeast Asia.

A compressor, considered the heart of an air conditioner, plays the key role in how much electricity is consumed.

In scorching Southeast Asia, electricity bills are heavy burdens on households relative to income. Tapping its strength in inverters, which control motors to curb power consumption, Daikin rolled out models featuring the technology in the early 2000s. Despite their higher prices, the energy-saving products have enjoyed sales growth outpacing the 10% or so overall market expansion. By offering these air conditioners to households ahead of rivals, Daikin cultivated a strong presence in the region.

While three Chinese companies lead the global market for residential air conditioners, Japanese companies -- offering installation services and touting their technological advantages -- have an edge in Southeast Asia.

In Vietnam, where less than a fifth of households have air conditioners, sales are rising at an annual clip of nearly 50%. Daikin plans to increase its sales in Vietnam by around 70% to 1 million a year by fiscal 2020. In Indonesia, air conditioner sales are growing 30-40% a year.

South Korean companies like LG Electronics are sharpening their focus on Southeast Asia, and Chinese players, facing a slowdown in the home economy, are seen going on the offensive in the region. Daikin considers Southeast Asia a key market, along with North America.

Daikin plans to lift air conditioner sales in Asia and Oceania by 30% from fiscal 2015 to 380 billion yen in fiscal 2018.

Source: Nikkei Asian Review