What is the Automotive Climate Control System?
When you hear the term 'automotive stocks,' you might think of popular vehicle manufacturers like Tesla, Ford, or Hyundai. However, there are investment opportunities beyond the vehicle itself—specifically in the components that make up the car. Today, we explore the promising sector of automotive climate control systems, also known as HVAC (Heating, Ventilation, and Air Conditioning) systems. These are the parts responsible for regulating temperature and ventilation within the vehicle.
Why Is It Important?
👉 A Must-Have for Electric Cars
In traditional combustion-engine cars, heating and cooling were relatively minor concerns, as the heat generated from the engine could be used for these purposes. However, electric cars don't have this luxury. They must draw upon their limited battery capacity for both driving and climate control, causing the driving range to diminish quickly, especially in extreme temperatures. Hence, a well-designed HVAC system is not just an option but a necessity in electric vehicles.
👉 Rapid Industry Growth
As sales of electric and eco-friendly vehicles continue to rise, the automotive climate control sector is set to benefit. Currently, the global market size is estimated at $53.78 billion and is projected to grow at a rate of 6.39% annually, reaching $77.95 billion by 2028.
Notable Companies to Consider
👉 Hanons Systems
A leading South Korean company, Hanons Systems is second only to Japan's Denso in terms of market capitalization. The company has a robust presence in the eco-friendly vehicle sector, with 93% of its new orders coming from this market as of 2022. With revenue predicted to surpass $9 billion for the first time this year, it's a stock to watch.
👉 Shinsegae Delta Tech
Although its market capitalization of $312 million pales in comparison to Hanons Systems' $5.1 billion, Shinsegae Delta Tech has a more diverse portfolio, dealing in both automotive HVAC and secondary battery components. Recent reports indicate strong sales and stockouts in battery parts, making it an intriguing investment option.
👉 Woori Industries
Woori Industries specializes in core automotive HVAC components like PTC heaters. Despite facing operational losses between Q4 2021 and Q3 2022, it is currently rebounding thanks to new contracts with well-known car manufacturers. Most notably, the company is the exclusive supplier for all Tesla models.