COVID Summer Distributor Sales

BY Brian Loftus
11/16/2020 - HVAC Market Intelligence

Key Takeaway: Equipment sales are poised for growth during the year ahead given the weak performance of Furnace and ducted Heat Pumps during the past year, and near normal weather comparisons for ducted AC.


The dollar weighted annual sales growth was near 4% before the economic coma and after our COVID summer of recovery, but that placid performance does not come close to describing the recent journey. Over the past few months, we experienced demand uncertainty, supply chain disruption, multiple hurricanes, horrific wildfires, warmer than normal temps in the northeast region, and the constant fear of getting infected and then compromising loved ones. The result is the volatile monthly distributor sales performance that is reflected in the results by the three primary equipment lines.


The annual pace of ducted AC unit sales by distributors has been in a narrow range since late 2017. Changes to the annual growth rate reflect the modest variation within that range until sales were interrupted this spring. After the catch-up in June and later in the summer as more inventory arrived [AHRI AC shipments +28% in August], the annual unit pace has nearly recovered. Sales in the Central and Great Lakes regions, 40% of the annual total, are off by -2% since the end of 2018. During that same time frame the sales in the Western and Southeast regions, 30% of annual total, has increased by 4%.


The annual rate of furnace unit sales was about flat through the first nine months of 2019. Sales began to fade after heating degree days were at or below the prior year during November and December of 2019. Furnace unit sales were off by 20% per month as heating degree days were below normal in nearly every region during January and February of 2020, then six-of-seven regions during March. This is the most consistent and challenging period of uncooperative weather I have seen; this drove the annual growth rate down to -10% by the end of the 2019-20 heating season. The interruption of construction activity cut the annual growth further to -15%. Furnace sales have begun to turn with 20% growth during August in the Central and Northeast regions where one-third of annual demand resides. Given the very weak prior year results, furnace demand has the most room for growth during the year ahead, with very easy weather comparisons.


Ducted heat pump unit sales growth paused during 2019 after fairly steady progress from 2017 through 2018. More than half of sales occur in the Southeast where heavy rain and flat/down cooling degree day comparisons helped trim demand by -5% to -10% this summer. Sales in the region began to turn in September as we see in the above chart, while sales surged by 30% in the Southwest and Western regions that are responsible for one-fourth of annual demand.

Equipment sales are poised for growth during the year ahead given the weak performance of Furnace and ducted Heat Pumps during the past year, and near normal weather comparisons for ducted AC. Equipment unit sales data by state and efficiency level is available through HARDI’s Unitary Market Report. HARDI distributors have access to this information at no charge in exchange for their participation in the program. The data is available to HARDI supplier members via subscription. HARDI distributors should participate so we can accumulate the market data you will need to understand regulatory changes and rebate opportunities. This state level insight allows you to see the demand per efficiency level in your state to assist with your inventory investment and for insight into your relative performance. Please contact Brian or Tim when you are ready to deploy this competitive advantage in your market.

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