The global connected car market size was valued at USD 86 billion in 2021 and is estimated to reach an expected value of USD 361 billion by 2030, registering a CAGR of 17.3% during the forecast period (2022 – 2030).
Providing comfort, convenience, performance, safety, and security in addition to strong network technology, connected cars enable connectivity on wheels. By connecting to web networks, the driver can communicate in real time. The primary drivers of the global connected cars market growth are the rise in consumer demand for connectivity solutions, the surge in requirement for constant connectivity, increased dependency on technology, and the rise in the tech-savvy population. Machine-to-machine (M2M) communication platform is one of many connectivity solutions that automakers and service providers have developed over time. Two connected cars can communicate with each other thanks to this M2M capability in a car. The vehicle has many sensors and computers that give the driver precise and up-to-the-second information. This furthers the market's expansion by encouraging the use of linked vehicles.
Factors such as technological advancements, a rise in production of vehicles, and an increase in demand for luxury & comfort in vehicles are expected to supplement the market's growth. However, the increase in demand for lightweight suspension systems and the development of advanced suspension systems are anticipated to provide a better opportunity for market growth.
The Rise in Trend of Connectivity Solutions
Over time, the meaning of connectivity has evolved thanks to smartphones. Even while traveling, people want to remain linked to the outside world. Since connectivity is now a need, automakers are incorporating connectivity features into their automobiles to increase sales. Customers anticipate their cars to perform duties like those of their cellphones and PCs.
Automobile manufacturers now focus on integrating networking options into their vehicles. Modern automobiles use several connectivity technologies that need an internet connection to work. Embedded, integrated, or tethered connection options can all be used to enable connectivity in a vehicle. One of these connectivity options provides the driver and any passengers using the vehicle with access to the Internet. A smartphone, modem, or networking device can be used to create an in-car hotspot that gives Internet access to all of the vehicles' electronics. Therefore, the rise in the trend of connectivity solutions drives the growth of the connected cars market.
Ease of Vehicle Diagnosis
One element that is anticipated to accelerate the market growth for connected cars is an advanced diagnostic system. The technology in the car will provide information about the vehicle to the car dealer and the client as part of sophisticated diagnostics, which can assist in identifying potential automotive problems before they arise.
Fleet management makes it easier to track vehicle records, identify the vehicle that has traveled the most distance, and give service accordingly through connectivity solutions. Utilizing the available diagnostic service is a reliable way to assess the health of the cars. Customers may take care of their vehicle's maintenance, which saves them time and money by averting unplanned expenses and breakdowns. The system provides a maintenance schedule and timely reminders to the user. The diagnostic system monitors the health of the engines by keeping track of the smoke emissions and fuel usage of the cars. The decision maker, who determines the service schedules for the vehicle, receives a thorough report from the diagnostic service regarding the vehicle. Consequently, the market expansion is anticipated to be fueled by the convenience of car diagnosis with mobile applications.
The Threat of Data Hacking
Technology that is still in its infancy is the connected automobile. The market for connected automobiles is constrained by unlawful access to various automotive connectivity solutions or hacking into the in-vehicle connectivity system. The primary security concern is that the hacker has access to the computer system of the cars and the data that it collects and stores. Thus, hacking threats against connected cars are expected to hamper the market's growth.
Intelligent Transportation System
The safety services provided in connected cars are an appropriate example of cutting-edge aftermarket technology, which involves sharing data between vehicles and humans. Telecommunication and automotive technologies are combined in safety to increase vehicle efficiency, lower fuel and maintenance costs, improve security and safety features, and help drivers' overall driving experience. Another function of linked automobiles is the driver assistance system, which aids the driver in selecting the best path to get to their destination. Additionally, it alerts about the availability of parking spaces and traffic congestion. The intelligent transportation systems offered by all these connected automobile capabilities enhance the overall driving experience.
The global connected cars market is segmented into technology, connectivity solution, service, end-use, and region.
Based on technology, the global connected cars market is divided into 3G, 4G/LTE, and 5G. The 4G/LTE segment was the highest contributor to the market and is estimated to grow at a CAGR of 13.7% during the forecast period. Leading producers of technologies for automotive manufacturers are collaborating to produce new vehicle tracking technologies to be used in connected cars. For instance, in November 2018, a top positioning and wireless communication technology producer, u-blox, is collaborating with a technology and product developer for the automotive market, ERM Electronic Systems Ltd., to produce an advanced vehicle tracking device that includes 4G and Wi‑Fi technologies. The development and production of advanced and fast vehicle tracking technologies using 4G and LTE in connected cars fuel the adoption of 4G/LTE technologies in connected cars. Production of automatically connected cars for real-time applications using 4G/LTE technology is a significant growth opportunity for the key players in the market.
The 5G segment is the second largest. Currently, the connected cars market is in its transition phase. Several automobile manufacturers are switching to 5G enabled connected cars solutions that also offer 3G/4G service, depending on the situation. Although 5G-supported connected car devices and services are a bit expensive compared to other devices, their market is experiencing growth due to the fast data transfer speed and increased bandwidth offered. Automobile manufacturers are switching from 4G/LTE enabled connected cars solutions to 5G enabled devices. Yet a car with a 5G-enabled connection can provide multiple valuable services such as telematics, remote control access, infotainment, GPS tracking, and others. These 5G solutions are easy to use, affordable, and facilitate remote diagnostics of a vehicle, giving it an upper hand in the market.
By connectivity solution, the global connected cars market is categorized into integrated, embedded, and tethered. The integrated segment was the highest contributor to the market and is estimated to grow at a CAGR of 17% during the forecast period. Leading manufacturers of products for connected cars are receiving certification from the organizations that govern the safety functions in the automotive industry. For instance, Harman International., a subsidiary of Samsung Electronics Co., Ltd., is focused on technologies for connected cars that received the relevant certificate commissioned by a certification company, TüV SüD, for meeting international safety standards in the automotive industry. Software used in the connected cars of this company uses connected, integrated mobile devices that are secure across all platforms. Consumers today require constant Internet access and prefer connectivity solutions that can function and provide network access through their mobile devices. This boosts the growth of integrated connectivity in connected cars. The connectivity devices used in connected cars may differ from user to user in the form of hardware or application platform used. Thus, manufacturing a universal solution compatible with all connectivity devices provides lucrative opportunities for the key players operating in the connected cars market.
The embedded segment is the second largest. The advantage of the embedded system is that it renders functions even if the mobile phone does not have the residual battery to place a call or avail of a service, which drives the growth of embedded connectivity in the connected cars market. The rise in demand for autonomous vehicles and connected cars is expected to fuel the demand for connectivity technology, which offers lucrative growth opportunities for the key players operating in the market.
By service, the global connected cars market is classified into driver assistance, safety, entertainment, well-being, vehicle management, and mobility management. The safety segment was the highest contributor to the market and is estimated to grow at a CAGR of 17.8% during the forecast period. Various telecommunication companies and multinational automakers collaborate to advance connected car technology while prioritizing road safety. For instance, in collaboration with Huawei Technologies Co., Ltd., the Vodafone Group and Jaguar Land Rover showcased the new C-V2X technology, a cellular vehicle-to-everything connected technology, to optimize road safety standards. Adopting technology to increase the level of safety in the vehicle boosts the growth of connected vehicles that are enabled with safety features.
The driver assistance segment is the second largest. Advanced features such as voice assistance, Internet connectivity to search locations of interest, distance notification, provision of multiple map views, information about traffic congestion on the route, the suggestion of alternate directions, and others drive the use of driver assistance in connected cars. The production of autonomous taxis is expected to drive the passengers to the desired destination with the help of driver assistance. This provides numerous growth opportunities for the key players operating in the connected cars market.
By end use, the global connected cars market is bifurcated into OEM and aftermarket. The original equipment manufacturers (OEMs) segment was the highest contributor to the market and is estimated to grow at a CAGR of 17.1% during the forecast period. EMs are gaining traction in the connected cars market due to the increased adoption of connected vehicle services. Also, advancement in technology has enabled the customers to choose the connected car's service in the vehicles, which has eventually led to the growth of the global connected car market.
By region, the global connected cars market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.
North America was the highest revenue contributor and is estimated to grow at a CAGR of 11.8%. North America includes the U.S., Canada, and Mexico, across which the global connected car market report has been studied. The North American connected cars market is anticipated to experience significant growth due to the expansion of the connected car network. In addition, leading telecommunication companies are investing in building the capabilities of connected cars. The increased production and sales of vehicles throughout North America has led to the growth of connected car service across North America. Connected service providers have carried out numerous developments to offer better and more efficient service, eventually leading to regional market growth.
Europe is the second largest region. It is estimated to reach an expected value of USD 145 billion by 2030, registering a CAGR of 20.6%. Europe includes the UK, Germany, France, Russia, Italy, and the rest of Europe. Leading connected car developers are receiving funding from investment companies to enable the adoption of cybersecurity in connected cars. This is incorporated for the secure transfer of data. In addition, leading manufacturers are launching new autonomous, connected vehicles to offer an enhanced driving experience. Top companies operating within Europe have developed to provide better and more efficient connected car services, thus leading to the growth of the connected car market across Europe. Also, introducing advanced features such as ADAS has enabled vehicle manufacturers to offer connected vehicle services, eventually leading to market growth across Europe.
Asia-Pacific is the third largest region. Asia-Pacific includes China, Japan, India, South Korea, and the rest of Asia-Pacific. Numerous vehicle manufacturers operating across Asia-Pacific have carried out developments related to connected services, which eventually supplement the growth of the connected car market across Asia-Pacific. The connected cars market is anticipated to experience exponential growth owing to the collaboration of leading connected car companies and the adoption of the 5G network for connected cars. In addition, wireless service providers are working to provide advanced wireless platforms for connected cars, which is also expected to supplement the growth of the Asia-Pacific connected car market.
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