Connected cars have made driving on the road a safer and more enjoyable experience. Connected cars provide Internet access and are also equipped with a wireless LAN (local area network). Typically, connected cars manufactured after 2010 are equipped with an infotainment unit, a head unit, and an in-dash system with a screen. The screen connected to the in-dash system helps to control and manage various functions in the car.
Some of these functions include navigation, music playing, smartphone apps, engine controls, voice commands, and car diagnosis. Apart from these functions, manufacturers of connected cars are offering a complete set of personalized and connected services to buyers.
Factors Contributing to the Growth of the Connected Car Market
The primary factors contributing to the growth of the connected car market include awareness of the safety and security provided by these cars and their Internet connectivity. Some of the safety features such as emergency calling and stolen vehicle tracking are gaining popularity among consumers. Other services such as traffic information, weather information, gaming, entertainment, notification of speeding, notification of crashes and location information are also boosting the growth for this market.
By application the connected car market is divided into infotainment, telematic, and navigation. The growing demand for traffic information services has led to an increase in the popularity of navigation applications. Among all the applications, navigation dominated the connected car market globally with more than 40% share in 2012.
High cost of hardware hampers the growth of this market. Also, the risk of the driver getting distracted by too many features equipped in a connected car is higher compared to a normal car, which also inhibits the growth of this market. But, the rapidly evolving networking technologies serve only to boost the demand for these cars.
Connectivity Technology in Connected Cars
According to the connectivity technologies, the connected car market is divided into categories such as: 4G (LTE), 3G (UMTS, HSPA, HSPA+), and 2G (GSM, GPRS, EDGE). Out of these technologies, 4G being the fastest technology held over 30% of the entire connected car market share in 2012. 4G technology allows access to the newest applications and services in a vehicle which enhances consumers’ experience. This technology also enables better in-car connectivity, so that the driver can monitor and communicate with his/her car in an extensive and safe manner. Embedded, tethered, and integrated are the three major connectivity solutions for connected cars. 50% market share was dominated by the integrated segment in 2012, which was followed by embedded and tethered segments.
Geographically, the connected car market is categorized into the North American region (U.S., Mexico, and Canada), the European region (Germany, U.K., Italy, France, and Rest of the Europe), the Asia Pacific region (Japan, South Korea, China, Australia, and Rest of the Asia Pacific), and Rest of the World (Middle East and Latin America). The North American region dominated the market in 2012 due to its technological developments in entertainment head units and higher smartphone penetration. 4G technology is becoming widespread in North America and Europe, while 3G would get a boost from countries such as India.
Earlier the focus of the connected car market was on the North American and European region. Currently, manufacturers are focusing their attention on other countries as well, which will further accelerate the growth of the connected car market. Market analysts have projected that the market for connected cars is to reach a market value of USD 131.9 billion globally by the end of 2019.
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