Connected Car Market Overview
Global connected car market size was valued at $43,451.0 million in 2016, which is expected to reach $3,29,264.0 million by 2023, at a CAGR of over 30% during the forecast period. The connected car industry from recent past is showing a very promising landscape for the future growth of advanced car-embedded technology. The connected car technology has progressively been popular from past few years amidst the increasing interest of end-users towards user-friendly driving features. The emergence of advanced connected cars in terms of accessibility and connectivity has enabled the drivers to facilitate seamless real-time communication on the go, along with increased comfort level, convenience, performance, safety and security.
The connected car market is segmented based on product & service, connectivity solution, technology, application, and by geography. Among the various products and services, fleet manager contributed the highest revenue to the global market. It accounted for more than 40% of the market in 2016. Connectivity solutions are further categorised into integrated, embedded, and tethered, of which nearly 50% of the market is expected from integrated connectivity solutions by 2023. Connected car majorly find applications in navigation, infotainment, and telematics. Navigation had been the largest application area and is also expected to be the fastest growing application area for this market in the years to come.
North America has been the largest connected car market, owing to high technological advancements and consumer’s receptivity toward new technologies. Being one of the largest passenger car markets globally, North America is also expected to be a major avenue for the providers of connected car technologies. During the forecast period, the market is expected to witness the fastest growth in Asia-Pacific, and will account for over a quarter of the market share by 2023.
Connected Car Market Dynamics
Major players operating in the automotive sector are entering into agreements with the connected service providers to attract customers. The advanced connectivity features provided by the automotive parts or car manufacturers and network providers have opened new opportunities for the companies to expand their presence. Newly introduced navigation systems embedded inside a car, and growing smartphone accessibility of cars, are fuelling the demand of connected cars to a whole new level.
Factors driving the demand of connected cars worldwide include increasing availability of connectivity options, rise in the use of advanced diagnostic and maintenance system, and increasing awareness toward safety and security of passengers. Advanced diagnostic system is a feature that would boost the connected car market in the coming years. In advanced diagnostics, the system in car will supply data about the vehicle to both automobile dealer and consumer, which will help predict potential automobile issues before they happen. Safety and security is another aspect that acts as driver for the connected car market, which has always been crucial from the consumers as well as auto manufacturer. In case of accidents, these cars have the ability to send an SOS message along with the coordinates of the driver’s location. In case of theft, the owners will be able to track their vehicle easily using a smart phone app developed for this purpose.
The rise in connected vehicle management system is also backing the increase in demand for connected cars from various end-users. The rise in sophisticated vehicle management system (VMS) now provides detailed information about vehicles performance, and routinely sends data to insurance companies and various other fleet owners. Further, new technologies such as antifatigue devices are helping car owners to reduce accidents, by making them alert about potential risks. Carmakers with advanced vehicle management and connectivity systems gets benefited through the feature of close and secure connections that today’s connected cars establish with their customers. This helps them in increasing brand loyalty and have a longer customer lock-in.
A roadblock to the growth of connected car industry are high capital expenditure and maintenance cost. Providing connectivity solutions in vehicles results in additional expenses for consumers in the form of hardware, applications and telecom service charges. These additional costs bestowed upon the consumer have a significant negative impact on the global market.
Connected Car Market - Competitive Landscape
Partnerships and product launches have been observed as the major strategic steps taken up by key vendors operating in the connected car market, to capture a large market share. Automotive players are entering into strategic alliance with technology providers in order to combine each other’s expertise and offer best in class connected car solutions. For instance, BMW announced its partnership with IBM on connected car front. The collaboration would make IBM’s Bluemix with BMW’s CarData platform, through which CarData platform will gain access to Watson IoT. According to IBM, Watson IoT will be able to use its cognitive and data analytics services to develop new ways for customers to share and use information about their vehicles. Some of the major players operating in the global connected car market include Telefonica S.A., Google Inc., Bayerische Motoren Werke (BMW) Group, AT&T Inc., Intel Corporation, IBM Corporation, and Vodafone Group Plc.