The connected car market is set to grow threefold by 2018. Automotive manufacturers, together with the mobile information and communication technology industry, are preparing to respond to strong demand for vehicle telematics services.
The global connected car market will be worth €39 billion in 2018, up from €13 billion in 2012, according to new forecasts from vehicle technology consultancy SBD and mobile operators’ representative body the GSM Association (GSMA). The next five years are likely to see an almost sevenfold increase in the number of new cars equipped with factory-fitted mobile connectivity, designed to meet demand from both regulators and consumers. This market will largely be driven by safety and security features, plus infotainment services such as the news, weather information, social networking and music streaming.
Systems such as eCall, which alerts the emergency services in the event of an accident, will be the most common services supported by connected cars. According to the forecasts, 41.7 million vehicles equipped with these systems will be shipped in 2018. In revenue terms, by 2018 €24.5 billion will come from in-vehicle services, such as traffic information and web-based entertainment, compared with just €9.3 billion in 2012, €6.9 billion from the sale of hardware, up from €1.2 billion in 2012, and €4.5 billion from the delivery of telematics services, such as customer relationship management, rising from 1.8 billion in 2012. In order to provide connected services that are scalable, secure and intuitive, the automotive and mobile industries need to work closely together. With this in mind, the GSMA has founded the Connected Car Forum, a platform for sharing information between the two sectors. The CCF has set a target of more than 20% of vehicles sold worldwide in 2015 to include embedded connectivity solutions, and for more than 50% of vehicles sold worldwide in 2015 to be connected, either by embedded or smartphone-based systems.
Embedded systems versus ‘tethered’ or smartphone integration systems
The growth in embedded connectivity is likely to be driven in part by regulations in the EU and Russia, which make it mandatory for new vehicles to ship with systems that are able automatically to alert emergency services in the case of an accident. The advantage of this system is that it will still work even if the driver’s handset has no residual battery. Nevertheless SBD forecasts that almost 21 million cars sold in 2018 will be equipped with smartphone integration systems (i.e. 18% penetration), up from just 1.9 million in 2012. These systems enable the driver to view on a screen in the car apps running on his/her smartphone, and in some cases to interact with the apps via on-board controls. In revenue terms, over the next five years embedded systems are likely to dominate the sector. They are forecast to account for 83% of revenues generated by connected cars in 2018. Tethered systems, which make use of intelligence embedded in the car, but rely on the owner’s mobile phone for connectivity, are set to bring in 10% of revenue, with smartphone integration solutions generating the remaining 7%.