This year in March, the air conditioning industry found it harder to push inventory, and the widespread adoption of AI air conditioning still needs more time.

Questioning AI · What price and technological challenges does the widespread adoption of AI air conditioners face?

In March, as spring blossoms, it’s the last opportunity to stock up before the peak summer air conditioning season. First Financial learned that due to rising air conditioner costs and market growth pressures, retailers are hesitant to stockpile this year—some buy and sell quickly, while others reduce their inventory compared to last year. AI air conditioners are expected to be a new growth point, but market cultivation will take time.

Retailers Become Cautious About Stockpiling

The domestic air conditioning market is slowing down due to factors like real estate, with increased competition. According to AVC, the retail sales of split-type air conditioners in China are projected to decline by 6.9% year-on-year to 219.5 billion yuan in 2026. Last year, the retail average price for split-type air conditioners dropped to 3,099 yuan amid fierce competition.

This year, due to rising copper prices, air conditioner prices have increased slightly. However, retailers are cautious about stockpiling before the season, worried about market sales and price fluctuations. Gree Electric Appliances (000651.SZ) plans to allocate about 5% of its offline channel sales revenue for “channel subsidies” to support offline self-built channels. Meanwhile, companies like Midea, Gree, Haier, Hisense, TCL, and others are actively promoting more energy-efficient, comfortable, and healthy AI air conditioners to stimulate the market.

A retailer from South China told First Financial that Gree recently slightly increased the purchase prices for some cost-effective air conditioners locally, while prices for other mid-to-high-end models remained stable. Gree’s approximately 5% rebate (an incentive to stabilize channels and smooth seasonal fluctuations) will be based on their 2026 purchase scale. However, due to market growth pressures this year, their March purchases remain cautious.

The retailer also said that AI air conditioners are a new selling point and profit driver, but since they are high-end models, typically 15-20% more expensive than regular units, their current share in total sales is still limited.

“Air conditioners saw price increases in March, but since they are a necessity and technological iteration isn’t rapid, if rebates are sufficient and cash flow is good, we will consider some stockpiling,” said a retailer from Northwest China. This year, Gree offered more rebate points than usual—about 5%—which can be enjoyed only if they meet certain purchase commitments. So, they still stocked some units. They also increased inventory of Haier, Hisense, TCL air conditioners. “With copper prices rising, those who can maintain quality while reducing costs will have more opportunities.”

Unlike Gree, Midea Group (000333.SZ) is promoting whole-house smart systems and retail transformation, with minimal stockpiling, and distributors are also cautious. A retailer from Central China said they stocked some cost-effective Midea air conditioners this year, but in smaller quantities than last year due to market expectations. “AI air conditioners are the future, but market cultivation takes time. If prices rise too much, they won’t be competitive; if prices stay stable and features increase, consumers will gradually accept them.”

“We now maintain normal sales turnover for air conditioners, focusing on quick sales and replenishment—selling high when prices are high, and low when prices are low, following market trends to avoid price fluctuation risks,” said a retailer from East China.

The Process of Popularizing AI Air Conditioners

Industry analyst Fang Xuejing told First Financial that this year’s air conditioning market will have several characteristics: first, brand strategies will diversify, with major brands focusing on cross-industry expansion into industrial, automotive, and commercial applications, while new brands focus on residential air conditioners. Second, price competition remains fierce, with overall market expectations declining, and brands still aiming for growth. Third, high-end AI products are expected to grow, with new entrants like Zhuimi and Mebon injecting vitality, but whether AI air conditioners can offset rising copper costs remains to be seen.

“The competition in the air conditioning industry is shifting from price wars to multi-dimensional competition,” said Gan Jianguo, general manager of HarmonyOS Smart Selection Mebon Air Conditioners. “Brands are competing to develop high-end technologies like AI human sensing, fresh air, and whole-house air quality, while also targeting cost-effective markets. Leading companies are integrating their businesses, strengthening offline channels, or building smart ecosystems, while small and medium brands focus on niche markets. Domestic growth relies on government subsidies for old-for-new upgrades and structural upgrades, with products gradually trending toward AI and smart features.”

Regarding whether AI air conditioners can absorb the cost increase from rising copper prices, Gan said that AI features mainly add software costs. If copper prices stay below 80,000 yuan per ton, prices don’t need to change; between 80,000 and 100,000 yuan, profitability will be under pressure; above 100,000 yuan, the pricing system will need to be rebuilt. Currently, copper is over 90,000 yuan per ton. Integrating AI technology can increase user value and allow for higher prices, helping to partially offset copper cost increases.

Another senior industry insider believes that this year’s raw material price hikes will significantly impact product costs, with exchange rate effects adding at least 5-10%. Leading brands have the pricing power to push high-end and new products to overcome this. However, second- and third-tier brands mainly focus on basic functions and cost-effective products, facing substantial profit pressures, with some third-tier brands possibly exiting the market.

“The overall pattern of China’s air conditioning market has been relatively stable for years, with only minor changes in rankings or market share. Emerging brands bring innovation and vitality, but the market structure won’t change dramatically. Currently, concept hype and homogenization are still prevalent,” said the veteran.

He also noted that due to macroeconomic influences, China’s air conditioning market has entered a stock or shrinking phase, with changing consumer structures. As a result, channel operators tend to adopt a wait-and-see approach in product selection to control risks, and manufacturers find it increasingly difficult to push inventory.