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The global connected car market was valued at $51.9 billion in 2017, and is projected to reach $156.1 billion by 2023, witnessing a CAGR of 20.7% during the forecast period.
Among all regions, North America has been the largest connected car market, owing to the rapid technological advancements and consumers’ receptivity toward new technologies. Being one of the largest passenger car markets, globally, North America is also expected to be a major revenue generating region for the providers of connected car technologies in the coming years. However, during the forecast period, Asia-Pacific (APAC) is expected to witness the fastest growth among all regions.
Dynamics of Connected Car Market
The emergence of artificial intelligence (AI) interfaces is playing an important role in the connected car market growth, hence is viewed as a key trend in the market. Building upon this technology, automakers are providing AI software in vehicle infotainment systems, which serve as virtual personal assistants, with the ability to respond to voice commands and proactively guide the driver with the help of the navigation system. AI is radically guiding the automotive industry toward innovation, thereby increasing the customer satisfaction by enhancing the driving experience. Various automotive original equipment manufacturers (OEM) are collaborating with technology vendors to offer consumers the latest connectivity solutions. For instance, in April 2018, Alibaba AI Labs (the AI unit of Alibaba Group Holding Ltd.) partnered with major automotive OEMs, including Daimler AG, Audi AG, and Volvo AB, to supply AI technology for home-to-vehicle connectivity in China.
The growing demand for an enhanced driving experience is boosting the growth of the connected car market. With the urbanization rate on the rise, the need for vehicles for personal and commercial use is also increasing significantly. As a result, the world is witnessing a rapid increase in the uptake of vehicles, particularly in the developing economies, such as China, India, and Indonesia. This sudden increase in the number of vehicles on the road has led to various problems, such as traffic jams, road blocks, and scarcity of parking space. With the help of advanced connectivity features, these problems can be tackled to a certain extent, thus resulting in an improvement in the driving experience. Connectivity solutions, such as vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I), can significantly help automotive OEMs in providing the level of driving experience as sought by the consumers, thereby driving the growth of the connected car industry.
Connected Car Market Segmentation Analysis
When segmented on the basis of products and services, the wireless and cellular module category is expected to witness the highest CAGR, of around 29.0%, during the forecast period. The market for this category is forecast to grow, primarily due to the escalating demand for better operational efficiency of vehicles, increasing usage of internet of things (IoT)-based services in the vehicles, need for improved vehicle tracking and road safety, enhanced vehicle management, and rising number government regulations to improve the overall vehicle efficiency.
Among all applications, navigation held the largest share in the connected car market in 2017. This was majorly due to a rise in the demand for in-vehicle navigation on a real-time basis and for enhanced journey optimization with proper planning of routes by users.
Based on technology, the 4G/LTE category is projected to attain the fastest growth in the connected car market during the forecast period. The category is predicted to grow owing to the increasing demand for information in the vehicle, as it reduces the latency time, demand for reducing the driving time, and preference for increased driver experience by getting real-time traffic alerts, and better network coverage enhancement technologies in the vehicle.
Geographical Analysis of Connected Car Market
Geographically, North America was the largest region in the connected car market during the historical period (2013–2017). The demand for connected cars is constantly increasing in North America due to the rising demand for advanced technology and also for their unique features, earlier mostly unavailable in passenger cars. These include smartphone connectivity, roadside assistance, traffic and collision warnings, automobile diagnostics, and real-time traffic information. Globally, the U.S. was one of the first countries to deploy connected cars and adopt the machine-to-machine (M2M) technology in the automotive sector.
Competitive Landscape of Connected Car Market
The global connected car market is highly consolidated, with the presence of major players such as Delphi Technologies PLC, DENSO Corporation, ZF Friedrichshafen AG, and Valeo SA. Other significant players include Continental AG, Robert Bosch GmbH, Harman International Industries Inc., and Autoliv Inc.
Recent Strategic Developments of Major Connected Car Market Players
The companies in the connected car market are taking strategic measures to gain a larger share. The strategic moves range from product launches to business expansions and partnerships. For instance, in August 2018, ERM Electronic Systems LTD. launched StarLink Tracker with Wi-Fi. It is a multipurpose telematics product that integrates vehicle tracking, theft prevention, Bluetooth, 4G cellular, Wi-Fi, and driver behavior monitoring abilities in a sole device. Furthermore, in May 2018, DENSO Corporation and Metawave Corporation, a U.S. startup company that develops radar sensing technologies to detect vehicles and pedestrians, established a partnership to develop a smart automotive radar system for connected cars. Under this partnership, DENSO Corporation will develop the smart automotive radar system for the connected cars by using Metawave’s technologies.
Key Questions Addressed/Answered in the Report