Connected Car Market worth $56.3 billion by 2026

The connected car market size is projected to reach USD USD 56.3 billion by 2026, from an estimated USD 23.6 billion in 2021, at a CAGR of 19.0%, from 2021 to 2026. The growth of the connected car market is influenced by factors such as the increasing trend of in-vehicle connectivity solutions, the development of smart city infrastructure, 5G infrastructure, and intelligent transportation systems.

The developments and popularity of Mobility-as-service and Parking-as-a-service are expected to drive connected car services tremendously. MaaS providers typically act as intermediaries and offer smartphone applications for real-time and on-demand mobility services, including end-to-end ticketing and payment. Developments in autonomous vehicles, growing electric vehicle sales, and the popularity of integrated/smartphone-connected solutions are expected to increase car connectivity. Therefore, the connected car market is expected to witness significant growth in the future.

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Cellular would be the largest and preferred network type to avail of connected car services

Cellular network has evolved over the years from 2G GPRS to 3G HSPA and 4G LTE, and now 5G. The launch of 5G will provide improved connected car technologies and functionality, not only in terms of services and features but also in terms of the accuracy of data and performance of vehicles. The implementation of a 5G-based telecommunication infrastructure can lead to a reduction in data transfer time and operating costs. The development of solutions by service providers in 5G technology is expected to further drive the adoption of the cellular network in the automotive industry. For instance, Qualcomm Technologies, Inc. announced the latest additions to its portfolio of Qualcomm Automotive Wireless Solutions for next-generation connected vehicles - the Qualcomm Snapdragon Automotive 4G Platform and the Qualcomm Snapdragon Automotive 5G Platform.

The integrated connectivity segment is estimated to be the fastest-growing market during the forecast period

The embedded connected car solution currently holds most of the connected car market by value. Earlier, OEMs relied on wired GPS or OBD dongle-based solutions to collect data from vehicles, but smartphone or integrated connectivity is growing rapidly. As integrated connectivity requires no additional fitted device, the solution becomes scalable, affordable, and reliable. Also, the growing popularity of shared mobility makes smartphone-connected solutions an attractive option to assess driving behavior and other connected solutions. The Asia Pacific is expected to be the fastest-growing market because of its cost-sensitive nature as smartphone/integrated connectivity requires minimal to no cost. For instance, according to GSMA, in 2020, 64% of the population in the Asia Pacific was connected by smartphone connectivity. This penetration and usage gap of 36% shows a huge potential in the Asia Pacific in the coming years. In Europe and North America, embedded connectivity is very popular due to various reasons such as government OBD mandates and already existing higher share of the premium and high-end vehicles (which already have in-built embedded connectivity).

Asia Pacific is expected to witness the fastest growth in the connected car market during the forecast period

One of the key drivers for the Asia Pacific market is the increased demand for infotainment and navigation services, particularly in China, Japan, India, and South Korea. China is one of the largest automobile markets in the world and the largest automobile market in the Asia Pacific. According to MarketsandMarkets estimates, China’s passenger car production is expected to reach 24 million units by 2027, presenting a huge opportunity for connected car manufacturers globally and domestically. China’s biggest technology companies are developing platforms for connected cars. For instance, in 2021, Blackberry and Baidu agreed to expand their partnership that aims to provide the automaker the tools to develop/launch next-generation connected and autonomous vehicles in China. India is expected to be a major automobile market in the Asia Pacific region. However, the penetration of connected cars is still at a nascent stage. With the growing demand for services such as infotainment and smartphone integration with vehicles, India is expected to be a lucrative market for connected cars in the years to come.

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.

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