Connected Car Market by Service ICE & EV (OTA, Navigation, Cybersecurity, Multimedia Streaming, Social Media, e-Call, Autopilot, Home Integration), Form, Market (OE, Aftermarket), Network, Transponder, Hardware and Region - Global Forecast to 2026
[303 Pages Report] The global connected car market is projected to reach USD 20.5 billion by 2026 from an estimated USD 9.8 billion in 2021, at a CAGR of 15.9% from 2021 to 2026. Factors such as the rollout of stringent safety regulations, adoption of high-end and luxury cars, and growing adoption of integrated connectivity are expected to drive the demand for connected cars.
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COVID-19 IMPACT
A decline in production since 2018 and the COVID-19 pandemic have had a severe impact on the entire automotive industry. This has resulted in disruptions in the supply of automotive components due to lockdowns imposed by governments. Major automotive players such as Fiat, Volkswagen, PSA Group, General Motors, and BMW have suspended production due to the outbreak. This scenario is expected to affect the connected car market, as the growth of this market is directly related to the production of vehicles. However, a steady recovery post-2020 in vehicle production will support the growth of this market. An increase in efforts by governments for developing intelligent transportation systems, increasing demand for smartphone features in the car, and automated driving technologies along with passenger safety features will boost the connected car market.
Most OEMs and Tier I companies have experienced several supply disruptions during the last few months due to the COVID-19 outbreak. Disruptions in the supply chain hamper the supply of raw materials and components, resulting in production delays. According to MarketsandMarkets analysis, a 15% decline in the global production of vehicles was witnessed in 2020. Countries such as China, India, and Japan, which hold the majority market share in global passenger car production, observed a decline of 15%, 17%, and 14%, respectively, in 2020 as compared to 2019.
The COVID-19 outbreak has resulted in a decline in vehicle production, which has, in turn, affected the overall connected car market. However, production has slowly started to resume in some countries.
Market Dynamics
DRIVER: Increased demand for enhanced user comfort, safety, and convenience
An increase in ADAS features in cars is the primary driver for the connected car market as these features ensure enhanced levels of safety. Governments in various countries are also focusing on mandating various ADAS and safety features. There are various ADAS features mandated in Europe and the US. For instance, Anti-lock Braking System (ABS) has been mandatory for all new vehicles sold in the EU since 2004, and Electronic Stability Control (ESC) became mandatory in 2014. Autonomous Emergency Braking (AEB) has been mandatory for all commercial vehicles sold in the EU since 2015. Similarly, connected car features such as e-call are mandatory in all new cars sold within the EU since April 2018. As various ADAS and other safety-related connected car features are mandated by governments, the overall demand for connected cars has increased.
RESTRAINTS: Lack of infrastructure for proper functioning of connected cars
Due to limited network connectivity on highways, vehicles are not connected to each other and the cloud. In developing countries such as Mexico, Brazil, and India, the development of IT infrastructure on highways is slower than in developed economies. 3G and 4G-LTE communication networks required for connectivity are offered in urban and semi-urban areas only. While several third-party logistics companies operate in semi-urban and rural areas, there are issues of low connectivity. Therefore, the lack of IT and communication infrastructure in developing regions and lag in government norms can hamper the growth of the connected car market in these countries. Also, as providers of telecom services, industry players might become subject to country-specific telecom regulations, such as lawful intercept and in-country entity requirements. The interoperability of the various platforms as well as the cross-border use cases will have to be discussed and regulated. The reliance on data networks also raises the question of net neutrality, where some data is given transmission priority by internet service providers.
OPPORTUNITIES: Emergence of various technologies such as 5G and AI
The enhanced user experience for all connected cars depends on wireless connectivity. Many telecom industry players are developing 5G to increase the safety and efficiency of connected cars. According to the international 5G automotive associations, 68% of accidents can be avoided with the upcoming 5G technology. For instance, the EU and South Korea have signed a deal to work together on 5G development, while both have promised USD 782 million and USD 1.5 billion, respectively, in funding for local 5G projects. In the UK, USD 78 million of funding has been commissioned for a 5G research facility, known as the 5G Innovation Centre (5GIC). With the increasing use of sensors and other technologies that collect data, AI will be key to making sense of everything. Some automobiles already use AI for Level 3 autonomous driving, but for the industry to reach Level 5, major enhancements need to be made to the cars as well as the infrastructure.
CHALLENGES: Cybersecurity
Despite major developments in connected cars technology, cybersecurity remains a major challenge to be tackled. Connected cars comprise hardware, software, mobile apps, and Bluetooth, and each of them is vulnerable to cyberattacks. There are various instances where cybersecurity has created a nuisance. For instance, in 2015, Fiat Chrysler recalled around 1.4 million vehicles due to safety reasons. Hackers took control of the cars’ infotainment system, which was connected to the mobile data network. Security researchers demonstrated that it was possible for hackers to control a Jeep Cherokee remotely, using the car’s infotainment system which was connected to the mobile data network. Similarly, Tesla S and Nissan Leaf are also examples of the threat of cyberattacks that connected cars face.
Embedded connectivity segment estimated to be the largest market during the forecast period
The embedded connected car solution is expected to hold a major share of the connected car market. The growth of embedded connected solutions in the long term can be attributed to various disruptive factors such as government mandates, cost optimization of service plans, and the growth of cloud-based services. According to GSMA, automakers are likely to adopt embedded solutions to meet regulatory requirements and as a basis for the provision of vehicle-centric telematics services. However, widespread adoption will depend on overcoming embedded solutions’ current limitations. For example, EOBD (European version of OBD) is mandatory for all gasoline vehicles in the European Union. In practice, virtually all vehicles sold in the US are designed and certified to meet California's OBD II requirements, regardless of where in the US they are sold.
However, at present, the embedded form is facing many challenges such as the technical stability of connected features and services, the high cost of technology and products, and, most importantly, the system-level integration of all features and services. Most of the customers are reluctant to pay more for embedded connected car solutions. These customers prefer a smartphone to fulfill the need for in-car connectivity. These challenges would continue to exist in the short term.
On-board unit expected to register the highest CAGR
The onboard unit is one of the transponder categories required for DSRC applications. Onboard transponder units are installed in vehicles to support connected car solutions. Earlier, an onboard unit was used to record the location and speed of vehicles through GPS sensors. Nowadays, it can record data from multiple sensors and transmit the information through a remote server to other entities such as vehicle and transport infrastructure. As governments are getting involved in various activities to promote intelligent transportation systems in metro cities, many OEMs are participating in the process of making smart transportation a reality. Hence, companies from the automotive and non-automotive industries are exhibiting their innovative solutions for V2V and V2I communications. For instance, the transportation department of the US has proposed V2V communication in vehicles to reduce potential crashes and improve the safety of passengers. Thus, with the growth in connected car adoption and developments in V2X infrastructure, the on-board unit is expected to witness growth in the coming years.
Asia Pacific connected car market expected to register highest growth rate during the forecast period
The Asia Pacific market is expected to witness the highest CAGR during the forecast period, especially in Japan and China. The growth of the US market is driven primarily by increasing vehicle safety and security norms, demand for vehicle-to-vehicle (V2V) connectivity technology, and the incorporation of IoT in the automotive industry.
The emergence of autonomous vehicle technology in the Asia Pacific connected car market is one of the key trends that is increasing the demand for advanced connected car features. Japan has one of the largest connected car penetrations globally, with China expected to witness significant growth in the coming years. Additionally, the increasing demand for aftermarket services through the renewal of connected car service subscriptions will drive the connected car services market in the coming years.
Asia Pacific: Connected Car Market
Connected Car Ecosystem
Key Market Players
The global connected car market is dominated by major players such as Continental (Germany), Bosch (Germany), HARMAN (US), Airbiquity (US), and Visteon (US). These companies have strong distribution networks at a global level and offer an extensive product range. These companies adopt strategies such as new product developments, collaborations, and contracts & agreements to sustain their market position.
Scope Of The Report
Report Metric |
Details |
Market size available for years |
2018–2026 |
Base year considered |
2020 |
Forecast period |
2021–2026 |
Forecast units |
Volume (Thousand Units) & Value (USD Million) |
Segments covered |
By Service, Form Type, Hardware, End Market, Transponder, Network, Region, electric vehicle type |
Geographies covered |
North America, Asia Pacific, Europe, and Rest of the World |
Companies covered |
Continental (Germany), Bosch (Germany), HARMAN (US), Airbiquity (US), and Visteon (US), Cloudmade (UK), Intellias (Ukraine), Tesla (US), Ford Motor Company (US), Audi (Germany), AT&T (US), Qualcomm (US), Verizon Communications (US), TomTom (Netherlands), Sierra Wireless (Canada) |
This research report categorizes the given market based on service, form type, end market, hardware, transponder, network, and region and electric vehicle type
Based on service:
- Navigation
- Remote Diagnostics
- Multimedia Streaming
- Social Media & Other Apps
- OTA Updates
- On-Road Assistance
- eCall & SOS Assistance
- Cyber Security
- Remote Operation
- Collision Warning
- Auto Parking/Connected Parking
- Autopilot
- Home Integration
- Vehicle Management
- Asset Tracking
Based on hardware:
- Head Unit
- Central Gateway
- Intelligent Antenna
- Electronic Control Unit
- Telematic Control Unit
- Keyless Entry Systems
- Sensors
Based on form type:
- Embedded
- Tethered
- Integrated
Based on end market:
- OEM
- Aftermarket
Based on transponder:
- Onboard unit
- Roadside unit
Based on network:
- DSRC
- Cellular
Based on electric vehicle type:
- BEV
- PHEV
- FCEV
Based on Region:
- Asia Pacific
- China
- India
- Japan
- South Korea
- Thailand
- Rest of Asia Pacific
- North America
- US
- Canada
- Mexico
- Europe
- France
- Germany
- Italy
- Spain
- UK
- Russia
- Rest of Europe
- Rest of the World
- Argentina
- Brazil
- Iran
- Rest of the RoW
Recent Developments
- In November 2021, Continental developed a technology solution for highly automated driving: an intelligent software that enables complex driving maneuvers autonomously. The Next Generation Driving Planner is an innovative software solution that enables highly automated driving from Level 3. This means that vehicles can master certain driving tasks independently and without driver intervention. The software developed by Continental represents a significant leap forward in driving intelligence.
- In June 2020, Bosch announced the launch of its new MEMS sensor, the SMI230, which ensures trouble-free navigation and helps realistically visualize vehicle movements. Production of the SMI230 at Bosch has recently started; the first customers are already getting the sensor as standard.
- In January 2021, HARMAN announced HARMAN Turbo Connect (TBOT), a new intelligent software agent that anticipates and mitigates vehicle connectivity discrepancies on the road. The newest solution in HARMAN’s telematics portfolio, HARMAN TBOT satisfies the current demand for high-speed connectivity with low latency, especially when used alongside 5G-enabled technologies like HARMAN’s Smart Conformal Antenna and full 5G and 5G-ready Telecommunications Control Units (TCU).
- In September 2020, Visteon Corporation introduced an all-new digital cluster for the 2021 Ford F-150. Leaving the traditional gauge design behind and establishing bold interface enhancements with cutting-edge HMI, Visteon’s solution refreshes the model’s cockpit with a contemporary shape – integrating high-resolution graphics that deliver realistic drive modes for a wide range of roads, environments, and weather conditions.
- In October 2020, Airbiquity launched its OTAmatic Vehicle Configurator, a tool for defining and managing connected vehicle software. The OTAmatic Vehicle Configurator gives automakers insight into the exact hardware and software configurations within a vehicle, manages known combinations of electronic control units (ECUs) and software versions in vehicles, and meets emerging government compliance requirements for type-certified vehicle systems.
Frequently Asked Questions (FAQ):
What is the COVID-19 impact on the connected car market?
ICE vehicle production remained significantly disrupted by the COVID-19 pandemic. The global production of vehicles pre-COVID was expected to grow from ~90-95 million units in 2020 to ~110-115 million units by 2025, with Asia Pacific and North America being the major markets for the passenger car segment. Due to COVID-19, most of the countries implemented complete lockdowns for more than two months, which, in turn, impacted vehicle production. Manufacturing units around the world were shut down, thus impacting production on a global scale. Although a few OEMs resumed partial production during the later quarters of 2020, the connected car market for automotive declined significantly in 2020.
Many companies operate in the connected car market space across the globe. Do you know who are the key market players, and what strategies have been adopted by them?
Continental (Germany), Bosch (Germany), HARMAN (US), Airbiquity (US), and Visteon (US) are some of the front leaders in the connected car market. These companies developed new products, adopted expansion strategies, and undertook collaborations, partnerships, and mergers & acquisitions to gain traction in the high-growth connected car market.
Which leading companies are working on the connected car services and hardware, and what organic and inorganic strategies have they adopted?
The leading companies working on hardware and services include Continental, Bosch, HARMAN, Airbiquity, Visteon, CloudMade, Intellias, and Sierra Wireless. For organic growth, companies have adopted new product development strategies. Whereas for inorganic development, collaborations and partnerships were mostly adopted.
What are the key market trends impacting the growth of the connected car market?
The emergence of various technologies such as 5G and AI, the increasing popularity of automation in the automotive sector, and developments in ride sharing and mobility services are projected to drive the demand for connected cars.
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The study involved four major activities in estimating the current size of the connected car market. Exhaustive secondary research was carried out to collect information on the market, the peer market, and the parent market. The next step was to validate these findings, assumptions, and sizing with the industry experts across value chains through primary research. The bottom-up and top-down approaches were employed to estimate the complete market size. Thereafter, market breakdown and data triangulation processes were used to estimate the market size of segments and subsegments.
Secondary Research
In the secondary research process, various secondary sources, such as company annual reports, presentations, and press releases; associations, such as Organisation Internationale des Constructeurs d'Automobiles (OICA), the International Energy Agency (IEA), European Automobile Manufacturers’ Association, Canadian Automobile Association (CAA), country-level automotive associations and trade organizations, and the US Department of Transportation (DOT); industry association publications, such as publications of OEMs’ vehicle sales; connected car magazine articles, directories, and technical handbooks; World Economic Outlook; trade websites, and technical articles, were used to identify and collect information useful for an extensive commercial study of the global connected car market.
Primary Research
In the primary research process, various primary sources from both the supply and demand sides were interviewed to obtain qualitative and quantitative information on the market. The primary sources from the supply side included various industry experts, such as CXOs, vice presidents, directors from business development, marketing, and product development/innovation teams, and related key executives from various key companies. Various system integrators, industry associations, independent consultants/industry veterans, and key opinion leaders were also interviewed.
Primary interviews were conducted to gather insights such as vehicle production forecast, connected car market forecast, future technology trends, and upcoming technologies in the connected car industry. Data triangulation of all these points was carried out with the information gathered from secondary research as well as model mapping. Stakeholders from the demand as well as supply sides were interviewed to understand their views on the points mentioned above.
Primary interviews were conducted with market experts from both the demand (OEMs) and supply (connected car solution and service providers) sides across four major regions, namely, North America, Europe, Asia Pacific, and Rest of the World. Approximately 40%, 40% and 20% of primary interviews were conducted from the demand side, supply side and others, respectively. Primary data was collected through questionnaires, emails, and telephonic interviews. In the canvassing of primaries, we have strived to cover various departments within organizations, such as sales and operations, to provide a holistic viewpoint in our report.
After interacting with industry experts, we have also conducted brief sessions with highly experienced independent consultants to reinforce the findings from our primaries. This, along with the in-house subject matter experts’ opinions, has led us to the findings as described in the remainder of this report.
To know about the assumptions considered for the study, download the pdf brochure
Market Size Estimation
A detailed market estimation approach was followed to estimate and validate the value of the connected car market for automotive and other dependent submarkets, as mentioned below:
- Key players in the connected car market for automotive were identified through secondary research, and their global market shares were determined through primary and secondary research.
- The research methodology included a study of annual and quarterly financial reports and regulatory filings of major market players (public) as well as interviews with industry experts for detailed market insights.
- All industry-level penetration rates, percentage shares, splits, and breakdowns for the connected car market for automotive were determined using secondary sources and verified through primary sources.
- All key macro indicators affecting the revenue growth of the market segments and subsegments were accounted for, viewed in extensive detail, verified through primary research, and analyzed to get the validated and verified quantitative and qualitative data.
- The gathered market data was consolidated and added with detailed inputs, analyzed, and presented in this report.
- Qualitative aspects such as market drivers, restraints, opportunities, and challenges were taken into consideration while calculating and forecasting the market size.
Bottom-Up Approach: Oe And Connected Electric Car Market
Bottom-Up Approach: Form Type
Top-Down Approach: End Market
Data Triangulation
- After arriving at the overall market size—using the market size estimation processes as explained above—the market was split into several segments and subsegments. To complete the overall market engineering process and arrive at the exact statistics of each market segment and subsegment, data triangulation and market breakdown procedures were employed, wherever applicable. The data was triangulated by studying various factors and trends from both the demand and supply sides.
Report Objectives
- To define, describe, and forecast the connected car market in terms of value (USD million) and volume (thousand units)
- By service (navigation, remote diagnostics, multimedia streaming, social media & other apps, OTA updates, on-road assistance, eCall & SOS assistance, cybersecurity, remote operation, collision warning, auto parking/connected parking, autopilot, home integration, vehicle management, and asset tracking) at the regional level, in terms of value at regional level
- By end market (OEM and aftermarket), in terms of value at the regional level
- By form type (embedded, tethered, and integrated), in terms of volume and value at the regional level
- By hardware (head unit, central gateway, intelligent antenna, electronic control unit, telematics control unit, keyless entry system, and sensor), in terms of value at the regional level
- By transponder (onboard unit and roadside unit), in terms of volume and value at the regional level
- By network (DSRC and cellular) at the regional level, in terms of volume
- By region (Asia Pacific, Europe, North America, and RoW), in terms of value
- By connected electric car market based on vehicle type (BEV, PHEV, and FCEV), in terms of value at the regional level
- To analyze the impact of COVID-19 on the connected car market (pre-COVID-19 vs. post-COVID-19)
- To analyze the most likely, low-impact, and high-impact scenarios of COVID-19 on the market
- To understand the market dynamics (drivers, restraints, opportunities, and challenges) of the connected car market
- To analyze the following with respect to the market
- Value Chain Analysis
- Ecosystem
- Market Scenario Analysis
- Porter’s Five Forces Analysis
- Average Selling Price Analysis
- Market Share Analysis
- Ranking Analysis of Top 5 Players
- To analyze the market ranking of key players operating in the connected car market
- To analyze the competitive landscape and prepare a competitive leadership mapping/ranking quadrant for the global players operating in the connected car market
- To analyze recent developments, alliances, joint ventures, mergers & acquisitions, new product launches, and other activities carried out by key industry participants in the connected car market
Available Customizations
With the given market data, MarketsandMarkets offers customizations in accordance with a company’s specific needs.
Connected Electric Car Market, By Region
- ASia pacific
- europe
- north america
Connected Electric Car Services Market, By Vehicle Type
- bev
- phev
- phev
Growth opportunities and latent adjacency in Connected Car Market
I am mainly interested in the way the autonomous vehicles will develop in the near future in terms of market size/value and technologies used. I am also interested in exploring the main players in the autonomous vehicle market now and in the near future. Hope that gives a better understanding.
Growth of the connected car market - Investments in entertainment software for connected cars, in particular new 3D sound systems
Growth of the connected car market - Investments in entertainment software for connected cars, in particular new 3D sound systems
As an SW consultant, I would like to present customers how the connected car market would be in the future and what should be prepared.
From reading the brief description, I get the sense that Connected Services are going to be the largest drivers of the annual growth rate of connected cars. As with any other new services, most of these new connected services need to break the "lack of adoption" barrier (as witnessed by mobile wallet industry). With high numbers of vehicles (in USA) on the road now (existing, non-connected cars), how do we expect the consumers to quickly adopt to the new connected services? Can we leverage some of the existing technologies and provide the "convenience" of driving to the existing consumers of non-connected cars? In a way, get them used to the newfound convenience which encourages them to adopt to new connected services after they buy a new "connected" cars. This is exactly what we are trying to address in our company. We would like to leverage the details in this report and make a case for an accelerated adoption roadmap for connected services.Thank you
Developing / selling end-to-end connected vehicles solution. Client (consumer and industrial) applications developed by ourselves or third parties on car sharing, taxi dispatching, bus dispatching, etc.
Looking to understand what market sizing for digital engagement (advertising and personalization) in the connected car is projected for the next 5 or so years.
Amply provides fleet charging as a service to connected cars / fleets. Need to understand the addressable market
Amply provides fleet charging as a service to connected cars / fleets. Need to understand the addressable market
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