End-user survey of drives for HVAC

The HVAC customer base in the electric drives market, accruing revenues worth $159.3 million in 2001, remains highly cost-conscious, according to a new report.

The HVAC customer base in the electric drives market, accruing revenues worth $159.3 million in 2001, remains highly cost-conscious.

The strong degree of price-sensitivity underlines the imperative for drives manufacturers to focus on the demand-based approaches to pricing and on the elasticity of demand.

HVAC constitutes the one sector recording the highest total of individual electric drive shipments, estimated at some 14.3% of the total.

The benefits associated with improved efficiency and energy saving will support sales of electric drives to the HVAC sector, set to reach $210.9 million in 2008.

A new end-user survey by Frost and Sullivan, the international marketing consulting company, identifies pricing models as a distinct weakness in the strategy plan of many an ambitious electric drives manufacturer supplying the HVAC sector.

Continued strong customer acceptance and awareness, combined with manufacturers' strong stress on competitive pricing, have helped electric drives succeed in the price-oriented HVAC market.

Despite their advancing maturity, the electric drives and the HVAC sectors are still experiencing robust growth and technological advancements.

Developments, however, are evolutionary rather than revolutionary, and the average spend per order remains below the market average owing to the lower power rating coverage demanded.

Mik Sabiers, Research Manager at Frost and Sullivan, reports: "While a negative influence on prices could be observed across the entire drives sector in recent years, the HVAC sector has seen sharper falls due to the lower average price level.

The continuation of this trend could act to impact competitor profitability and limit the scope for stronger revenue growth in future years".

Still, Frost and Sullivan's findings point to a particularly high level of new purchases in the HVAC sector.

In terms of the actual order, the HVAC sector is notable for the fact that 85.3% of respondents stated that the reason for the purchase was for new business.

This highlights the ongoing focus of expanding the installed base and widening the use of drive solutions.

In total market terms, approximately a fifth of orders were for between six and 25 drives, while in the HVAC sector this is closer to a third, more than twice the level of the food and beverage sector and almost four times the level of the handling market.

The user base surveyed ranged from purchasing and plant managers through to application engineers as well as senior management within companies in the HVAC sector.

The largest percentage of parties surveyed were engineers involved in not only specifying the drive, but also in operating the technology.

With regards to the sales process, under a fifth of respondents purchased a single drive, while the greatest total of purchases was for between two and five drives at 37.5%.

Nearly two thirds of customers were buying drives on a monthly basis with the majority of purchases being drives with ratings between 2.2 and 7.5kW.

In looking at the total spend, while just under a quarter spent less than $5000 annually, 31% of respondents were spending between $50,000 and $250,000 a year, crystallising the prevalence of a substantial proportion of the customer base who acquire high volumes and values of drives.

"Most interestingly", Sabiers continues, "the key decision-maker in the purchasing process was the purchasing department, meaning manufacturers should look to target this sector if they are to want to gain orders".

The HVAC sector enjoys the highest levels of customer satisfaction, with 91.2% of respondents stating that they were content with their supplier.

Nevertheless, loyalty was lower with just over four in ten stating that they would not consider other suppliers in future.

Of respondents, 12.5% of users in the HVAC sector expected to lower spending in the future.

This is one of the lowest percentages in the market as a whole, and bodes well for future growth.

Customers are continuing to express good interest in the technology, and 40.6% of customers expect to increase their spending, the survey emphasises.

As one of the key market areas, and one in which there is a sizeable total of orders, even the number of customers who expect spending levels to remain the same, at 46.9%, means that there will still be a sizeable level of orders placed in the HVAC sector.

When asked to state the single most important criterion determining their purchasing behaviour, manufacturers cited competitive price as the overriding factor with more than 40% of respondents stating that this was the key issue for them.

However, when asked to evaluate price as well as a range of other fixed factors, a different level of importance was apparent.

With regards to the specific evaluation of set criteria, respondents rated quality as the most important issue, giving it a rating of 4.82 out of a maximum of 5.

Competitive price was the third most important issue being rated at 4.36 out of 5, still above the general market average.

Issues with lower priority included ease-of-use rated at just 3.73 out of 5 and technical support at 3.55 out of 5.

The majority of parties questioned during Frost and Sullivan's survey agree that Siemens has achieved the greatest penetration in the market with one in five respondents having purchased a drive from the company.

This shows that Siemens has been focused on reaching a wider customer base and could act to support the company's continued leadership in the field.

ABB also scored well with 17.6% of respondents having purchased a drive from the company.

The third most important manufacturer in terms of supply was Danfoss with 16.9% of respondents stating that they had purchased a drive from this company.

Nevertheless, a whole range of other competitors are also actively serving this sector.

Some of the other main suppliers, although with a smaller standing, include Control Techniques, Schneider, Mitsubishi and Alstom as an example.

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