Business acquisitions, smarter HVAC system technologies, and higher prices for contractors and homeowners are the trends we expect to shape the HVAC industry in 2022.
2021 was an impressive year for HVAC sales and growth, as hotter summer months, colder winter months, and continued work from home boosted consumer demand. But last year was also marked by equipment scarcity, labor shortages, and other pandemic-fueled challenges.
While 2022 will see similar growth and challenges, other influences will be just as important to monitor. Below are the three HVAC industry trends we’ll be watching as the year unfolds.
1. HVAC BUSINESS CONSOLIDATIONS AND ACQUISITIONS
By October 2020, the HVAC industry saw more than 300 merger and acquisition transactions during a 12-18 month period. Some experts believe this trend will continue over the next several years. What’s driving this?
For one, older generations of contractors are looking to retire while a new generation of private equity firms is focused on buying up small businesses. For two, the focus on digitizing HVAC business operations continues to grow, but adopting new technologies is rarely a cheap undertaking. This puts small businesses that lack capital at a disadvantage, making the possibility of selling seem like the smart move.
Smaller contractors who don’t want to sell will need to find ways to remain competitive. If your business is in that boat, it’s not a bad idea to look into partnerships or vendor relationships that will help expand certain areas of your business without breaking the bank.
For instance, if you want to grow audience reach, HVAC advertising cooperatives or lead generation platforms like Casa might be worth investigating. Or maybe you’d like to get rid of handwritten quotes and go digital—many consumer financing solutions include payment calculator tools to help you streamline the quote process. Contractors who partner with us, for example, get access to our project estimator tool, allowing them to quickly build digital quotes with up to three monthly payment options.
Regardless of whether you’re looking to sell, more consolidations and acquisitions spell bigger players. It’s important to consider what this means for your business and act accordingly.
2. EVEN SMARTER HVAC SYSTEM TECHNOLOGIES
Energy efficiency and long-term cost savings are usually among the top reasons homeowners give for wanting smart thermostats—and understandably so. Heating bills are expected to increase 6% this winter for households that use electricity to heat and 30% for those who use gas.
But it’s not just the thermostats that are getting smarter. More and more systems use automation and artificial intelligence to provide preventative maintenance, determine where heating and cooling are most needed, and even activate smart blinds depending on the sun’s position.
While these new HVAC technologies can add up to future dollars saved for homeowners, they may find the upfront costs intimidating. That’s where contractors and technicians can step in as consultative partners, providing their customers with a breakdown of future cost savings, an overview of rebate programs and customer financing options, or even less expensive alternatives that could still result in energy savings.
Whatever the conversation looks like, it’s an opportunity to show your customers that you’re more than just a service vendor—you’re a trusted partner in making their homes as comfortable and efficient as possible.
3. HVAC PRICE INCREASES CONTINUE
Many HVAC manufacturers have already announced price increases on equipment, parts, and supplies, with increases ranging anywhere from 3% to nearly 20%. Supply chain issues, labor shortages, and several other factors have led to this rise in wholesale prices for HVAC contractors—many of whom will have little choice but to pass these costs on to their customers.
The good news? Higher prices haven’t seemed to damper consumer demand. A recent survey from Thumbtack found that 30% of homeowners plan to spend more than $10,000 on home improvement projects in the next 12 months.
While this is a heartening indicator that homeowners are willing to accept HVAC price increases, it won’t hurt to prepare your teams to handle customer objections when handing out quotes.
Even without the pandemic putting many American households under financial strain, customers like convenience at the end of the day. Offering homeowners flexible payment options, even if you suspect they can pay in full, could be the difference between a lost job and a $10,000 ticket.
With raw materials price increases, higher energy costs, and just plain old inflation, 2022 is shaping up to be more expensive for homeowners across the board. Contractors should have a strategy to help ease their customers’ financial burden without sacrificing sales. Want to learn more about how to add financing to your business? Reach out here.