The Japanese air conditioner manufacturer’s planned acquisitions and other investments in the region for the period through fiscal 2025 are a 60% jump from what it spent for the preceding four-year period.
In Indonesia, Daikin will spend US$220 million on a new factory in a Jakarta suburb. The plant is expected to come online in 2024 and churn out 1.5 million home air conditioners a year, creating about 2,000 jobs.
Until now, Daikin had a limited lineup of compact models, which account for about half of Indonesian demand. The new factory will build smaller models more suitable for areas with unreliable power supply, keeping prices low enough to compete with local manufacturers.
Daikin is seeking to expand its roughly 20% share to at least 30% in the market for home air conditioners. Exports to other countries with electricity supply problems, such as the Philippines, will be considered.
In India, Daikin will invest more at the site of a factory under construction, setting up a new building to produce high-capacity compressors for large air conditioners as early as 2024.
The Indian market, particularly for larger homes, is “growing fast and this will cause a shortage of compressors”, said Yoshihiro Mineno, senior executive officer. This is why Daikin is reassessing initial plans to produce smaller compressors and finished products.
Only about 5% of households in India have an air conditioner, suggesting the market has much room to grow.
Daikin’s models in India are designed to handle local conditions, such as unreliable electricity and poor road conditions that make product shipping challenging. The company wants to further enhance its ability to develop locally catered products and has earmarked about ¥6 billion to this end. It will also increase exports to Africa from India, turning the South Asian country into “a high-volume hub”, Mineno said.
Additional investments will be made in existing facilities elsewhere, such as Vietnam. In Thailand, a base for exports to the US and other markets. Daikin will increase the capacity for parts and finished products.
Daikin controls the biggest shares in India, Indonesia and Vietnam, and sees air conditioner sales in Asia and Oceania climbing 26% to ¥500 billion in the year ending March. The company aims to achieve even faster growth with a target of “¥100 billion in each of the key markets in Asia”, Mineno said.
Asia, excluding Japan and China, accounted for close to 20% of the global air conditioner market in unit terms in 2021, according to the Japan Refrigeration and Air Conditioning Industry Association. Daikin expects Asia to grow faster than other regions to make up about 30% of the global market as early as 2030.
Daikin expects total capital outlays to reach ¥210 billion for fiscal 2022, up 34% on the year. A heater factory is under construction in Poland, while plans call for new plants in Mexico and China.