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Daikin Industries Expands in Africa, Establishes Local Manufacturing for Air Conditioners

Aiming for a stronger foothold, Daikin sets up production sites in Nigeria and Algeria, targeting the growing African market
Japan
d 6367.TSE Blue Chip 150
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Daikin Industries is making strategic moves in Africa, establishing a manufacturing presence to tap into the continent’s burgeoning air conditioner market. The company has initiated a production site in Nigeria and is in the process of setting up another in Algeria. This shift from importing to local manufacturing marks a significant change in Daikin’s approach to the African market, aiming to meet the increasing local demand more effectively.

The Nigerian facility, located within a reseller’s site, relies on parts supplied from Daikin’s Indian plant. The company plans to scale production based on local orders, targeting sales of several tens of thousands of units. The move to produce locally is expected to reduce costs significantly, particularly tariffs associated with importing finished products. This strategy could see Daikin’s air conditioners priced between $400 and $540, offering an energy-efficient option for the African consumer.

In addition to manufacturing, Daikin is investing in local talent by training installation technicians across countries like Kenya and Tanzania. The company is also focusing on developing more affordable products to compete in a market dominated by cheaper alternatives from LG Electronics and Gree Electric Appliances.

Africa’s growing economy, estimated to expand by 3.5% in 2024, presents a lucrative opportunity for Daikin. With the continent’s air conditioning penetration rate at a mere 3%, compared to a global average of 60%, the potential for growth is significant. The African market, which saw a 10% growth in air conditioning units in 2022, is an increasingly important battleground for global manufacturers like Daikin, seeking to expand their global footprint.

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