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The global connected car market size was USD 14.34 billion in 2019 and is projected to reach USD 48.77 billion by 2027, exhibiting a CAGR of 26.3% during the forecast period.
Connected cars are vehicles that are connected to smartphones and tablets and are equipped with internet access, as well as have the ability to optimize their operations at regular intervals. Through the network connection, the car can share content with a series of devices inside and outside the car environment. The vehicle’s data are shared with the help of RADAR, LiDAR, and advanced sensors. In recent years, car manufacturers have developed advanced connectivity solutions such as vehicle 2 vehicle (V2V) and vehicle to infrastructure (V2I) systems. Vehicles connected to various devices help to enhance their safety as the driver receives real-time data of the vehicle’s surroundings. The primary aim of the adoption of these cars is to avoid collisions, reduce fatalities, and make vehicle management more efficient.
Contracting Activities in the Automotive Industry amid COVID-19 to Stall Market Growth
China is a major contributor to the rapid development of the automotive industry and is a primary distributor of various automobile components and technologies. However, the outbreak of the COVID-19 pandemic in the country has led to the imposition of stringent restrictions on cross-border trade. The automotive industry has been severely impacted by these restrictions and is facing several challenges amid the coronavirus pandemic. The automotive sector is an important part of the global economy, accounting for nearly 16% of the global GDP in 2018. A large number of manufacturing plants have been shut down worldwide due to lockdowns, social distancing, and declining demand for vehicles. In order to overcome the economic crisis, governments across the globe are encouraging manufacturing activities by introducing various programs such as the Make in India initiative. This initiative focuses on reducing dependency on components imported from other countries.
In Europe, various automobile companies have temporarily shut down to minimize losses. For example, Volkswagen and Daimler declared the temporary closure of their production plants in Europe amid the outbreak of the coronavirus pandemic. In Europe, most car companies and electronics manufacturers have temporarily closed factories or reduced production to a minimum, resulting in a massive loss of global trade.
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Installation of Cybersecurity Systems to Lead the Market Trends
The growing adoption of cybersecurity solutions in-car safety systems is a major trend in this market. In recent years, data have become one of the vital factors in the automotive industry. In connected cars, the user’s smartphone is synced with the car’s infotainment system. The user's data might consist of bank and medical details, which face a high probability of getting hacked. Tech giants such as Google and Apple are developing vehicle cybersecurity apps in order to prevent data from getting stolen. These apps are highly user-friendly, monitor the vehicle’s security, and notify the user if any stranger logs in from other devices. For example, DENSO entered into a joint development agreement with Dellfer to develop ZeroDayGaurd 1.0, a cybersecurity product for the automobile sector.
Growing Inclination of Consumers towards Anti-Theft Systems to Drive the Market
An increasing number of vehicle thefts are drawing the attention of car buyers to surveillance systems that can monitor their vehicles and send timely updates about their geographic location. Once the mobile is connected to the vehicle’s infotainment system, it keeps a record of the passenger's travel history or the location of the passenger's last travel spot, how many halts there have been in between, etc., which can make travel unsafe. In order to prevent data theft, car-owners have started to equip their vehicles with devices such as TravelEyes2, ProScout, and LoJack. These systems send a notification to the owners’ mobile phones, which enables them to lock the car with one touch.
Additionally, regulatory bodies have imposed stringent norms to curb the rising instances of data theft. For instance, Thales has partnered with the PSA Group (makers of Citroen and Peugeot) to identify the security threats and to develop a technique to identify these risks and take the necessary precautions to keep the vehicle safe and secure. In response, automotive manufacturers are recognizing the exigency of the situation and are actively working with professionals in this sector.
Increasing Adoption of Advanced Driver Assistance System (ADAS) to Fuel the Market
The rising adoption of advanced driver assistance systems (ADAS) is expected to drive the connected car market growth over the forecast period. The rapid adoption of software algorithms, sensors, cameras, processors, and advanced technologies in mapping road obstacles has improved the applicability of ADAS in vehicles, which is also expected to aid in reducing road fatalities. For example, according to the Road Safety report launched by the World Health Organization in 2018, the number of road fatalities has reached 1.35 million across the world.
Governments have also imposed stringent safety norms on automotive manufacturers to develop vehicles equipped with ADAS features amid growing concerns regarding the safety and security of passengers. For example, in 2013, under the Federal Motor Vehicle Safety Standard (FMVSS), the National Highway Traffic Safety Administration (NHTSA) of the US made it mandatory to equip Anti-lock Braking System (ABS) in all vehicle segments. Similarly, in 2015, the European Commission (EC) made it mandatory to install an e-call system from April 2018 in all new vehicles, which is one of the most vital features of connected cars.
Lack of Connectivity Infrastructure to Restrain Growth
As network connections on highways are restricted, vehicles cannot connect to each other and cannot connect to the cloud. Compared to developed countries, the development of connected car infrastructures in developing economies is lower. Uninterrupted 3G and 4G networks are available mostly in urban areas. This is a major factor that is expected to restrain the growth of the market over the forecast period. For example, in India, there are more than a million mobile users, but there is a huge lack of 4G data networks in the rural areas.
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Driver Assistance Segment to Dominate the Market
As per the market forecast, the driver assistance segment is anticipated to dominate the market over the forecast period. A driver assistance system consists of technologically advanced features such as adaptive cruise control, lane keep assist, 360 view camera, park assist, etc. that enhance the safety of the vehicle. Various governments across the globe have imposed stringent safety norms on automotive manufacturers. For example, in April 2020, the Indian automotive industry adopted the BS-VI specification, which includes reverse parking sensors in all vehicle segments.
The mobility management segment holds the second-largest position in the market. This system enables the driver to reach the destination safely in the shortest time and with the most efficient fuel consumption. It also offers vital information such as extreme weather and road conditions and real-time alternative routes to avoid external hazards, ensuring a superior driving experience.
The vehicle telematics segment is anticipated to achieve considerable growth in the market. The increasing IT infrastructure along highways that can seamlessly connect to mobile networks is expected to drive the demand for telematics connected solutions during the forecast period.
The infotainment system segment is also anticipated to show good growth over the forecast period. In recent years, infotainment systems have become one of the most vital components of vehicles. Automakers are increasingly installing infotainment features such as Wi-Fi hotspots, social media access, smartphone interfaces, and advanced mobile office platforms in their products.
Integrated Segment to Hold the Largest Market Share
Based on technology type, the market is segmented into embedded, tethered, and integrated systems. The integrated segment is expected to dominate the market over the forecast period. These systems provide unlimited data sharing possibilities and are cost-effective compared to embedded and tethered systems. Key OEMs across the globe have partnered with various players to develop advanced integrated systems for connected type of cars that provide seamless connectivity to the consumers. For example, Ford partnered with Geotab to develop a telematics solution for Ford vehicles.
The embedded segment is expected to occupy the second-largest position in the market. Factors such as cost optimization of service plans, cloud services, and governmental regulations are expected to help its leading position in the market. Key features such as remote diagnostics and eCall systems cannot function without an embedded system. Hence, the rising adoption of embedded systems is expected to fuel the adoption of these cars over the forecast period.
5G Segment to Lead Market Share
Based on network type, the market is segmented into 3G, 4G, 5G, and satellite. The 5G segment is anticipated to dominate the market during the forecast period. Several telecommunication companies are developing advanced 5G networks for better communication between connected cars and external devices. According to the 5G Automotive Association, more than 60% of road accidents can be avoided with the help of a seamless 5G network. For instance, South Korea and the EU have partnered to develop a 5G network for local projects by investing more than USD 1.5 billion. This is expected to curb the rising number of road accidents.
The satellite segment is expected to be the fastest-growing segment over the forecast period. Cellular and Wi-Fi networks support connected cars only in areas where mobile towers are present, that is, only in urban areas. Once the vehicle leaves the boundary of the mobile tower, the network gets completely cut-off and this may cause serious problems for the occupants in this type of car. In order to overcome this problem, various automotive OEMs, satellite operators, and mobile operators are focusing on developing hybrid satellite-terrestrial networks, which would offer uninterrupted connectivity. Hence, the increasing demand for satellite and 5G networks is expected to drive the connected car industry.
OEM Segment is Expected to Hold the Largest Market Share
Based on the sales channel, the market is segmented into OEM and aftermarket. The OEM segment holds the largest share of the global market. Increasing technological developments such as uninterrupted connectivity, cybersecurity, and the development of driverless cars integrated with highly secure software are anticipated to aid the dominance of OEMs over the forecast period. Increasing partnerships with key players to develop high-quality and cost-effective components is another reason that is fueling the growth of the OEM segment.
Vehicle 2 Vehicle (V2V) Segment to Hold the Largest Market Share
Based on communication type, the market is categorized into Vehicle to Vehicle (V2V) and Vehicle to Infrastructure (V2I). The V2V segment is expected to dominate the market over the forecast period. Vehicle to vehicle communication helps to reduce traffic congestion in large cities, enhances road safety, and augments the comfort of the occupants. Developments in wireless technologies and the increasing usage of advanced equipment such as sensors and GPS in V2V systems are anticipated to maintain the segment’s dominance over the forecast period. For example, in June 2017, Cadillac equipped the world’s first vehicle to vehicle communication (V2V) in its CTS sedan along with the development of the vehicle to infrastructure communication in Michigan.
The Vehicle to Infrastructure segment is expected to show good growth during the forecast period. Increasing government initiatives to develop a V2I framework are ensuring the stable growth of the segment in the market.
Asia Pacific Connected Car Market Size, 2019 (USD Billion)
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Based on region, the market is segmented into North America, Europe, Asia Pacific, and Rest of the World. The Asia Pacific region is expected to dominate the connected car market share owing to the increasing adoption of high-end and cost-efficient connectivity solutions. Consumer demand for in-vehicle embedded connectivity systems and the increasing shift towards connected cars has propelled the market growth in this region.
Europe is expected to be the second-largest region in this market owing to the numerous development projects undertaken by governments across the continent and the presence of major key players in this region. Growing partnerships and collaborations among the key market players have led to the early adoption of advanced technologies. For example, in January 2017, Parkopedia and Volkswagen launched high-definition autonomous driving (HAD) Parking Maps to provide their customers with detailed information about parking spaces.
North America is expected to grow steadily in the connected cars market over the forecast period. The growing adoption of advanced technologies such as 5G connectivity will help North America to showcase healthy growth in the market.
TomTom International is a Key Player in the Market
TomTom International is a major player in the global market. Deployment of a wide range of advanced connectivity solutions as well as the development of self-driving vehicles for intelligent transportation and safe mobility management are the key aims of the company. Also, the constant R&D efforts by the company are leading to the creation of innovative technologies, which are some of the prominent factors responsible for the dominance of the company.
An Infographic Representation of Connected Car Market
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The connected car market report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading applications of the product. Besides this, the report offers insights into the current market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the growth of the market over recent years.
Value (USD billion) & Volume (Thousand units)
By Application Type
By Network Type
By Technology Type
By Sales Channel Type
By Communication Type
Fortune Business Insights says that the global market size was USD 14.34 billion in 2019 and is projected to reach USD 48.77 billion by 2027.
In 2019, the Asia Pacific market value stood at USD 8.37 billion.
The market is projected to grow at a CAGR of 26.3% and will exhibit excellent growth during the forecast period (2020-2027).
The integrated technology type segment is expected to be the leading segment in this market during the forecast period.
Increasing adoption of advanced driver assistance systems is driving the global market.
TomTom is the leading player in the global market.
Asia Pacific dominated the market share in 2019.
Rising adoption of 5G connectivity is expected to drive the adoption of connected vehicles.
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