Connected Car Manufacturers' Focus on Software-driven Vehicles Allows for Cross-industry Collaborations

OEMs capture growth opportunities unleashed by LTE penetration to expand in North America, Europe and China, finds Frost & Sullivan's Mobility team

LONDON, May 2, 2017 /PRNewswire/ -- Innovations in the connected car market have revolved around data monetisation, with start-ups developing new apps and hardware/interfaces (smart phone pairing) or offering services like prognostics. Acknowledging the potential in data explosion, automotive suppliers are attempting to capture and sell car data by leveraging their software and hardware platforms. While over-the-air (OTA), human-machine interface (HMI) and connected services generate direct revenue streams, Big Data analytics will help save costs and accelerate returns on investments (ROI) for automotive original equipment manufacturers (OEMs).

"A notable example of cross-industry collaboration is the integration of virtual assistants such as Amazon Alexa into the vehicle. This allows non-automotive players to invest in connected homes and cars," said Frost & Sullivan Mobility Analyst Siddhanth Kumaramanickavel. "Companies like Maluuba, iNAGO, Promptu, Sensory and Baidu also are working on offering natural speech assistants, artificial intelligence (AI)-enabled speech assistants, and voice biometrics to automotive manufacturers."

Global Connected Car Market Outlook, 2017 is part of Frost & Sullivan's Automotive & Transportation Growth Partnership Subscription. The study forecasts that global connected car shipments will increase from around 25 million to almost 70 million units by 2022.

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The adoption of 4G long-term evolution (LTE) has increased connected car uptake and widened the subscriber base for telematics services. However, retention rates following free trials remain low. To attract more buyers, car manufacturers are experimenting with new service models such as product-as-a-service. Commission-based and transaction volume-based models will define revenue streams as businesses move toward this model.

So far, smart mobility, cybersecurity and software-defined cars have proven the key areas of interest across Europe, North America and China.

• North America: This region leads in LTE penetration. Volkswagen is expected to commercialise 5G-based services by 2020, while Toyota and Ford have collaborated to build an open-source infotainment framework, forming a consortium with other manufacturers. Manufacturers are also investing in white hat hackers for swift response to security threats, as safety is a bigger priority than comfort or convenience. Smart mobility and autonomous vehicles remain the focus areas for OEMs.
• Europe: Telematics penetration is still growing in this region. Mass-market OEMs are able to offer basic eCall services, while premium OEMs are packaging connected navigation as a suite of connected services.
• China: The country is focusing on data analysis, Internet-vehicle platform building and urban intelligent transport. Baidu's partnership with BMW and NVIDIA for AI and with Harman suggests a strong footprint for connected automated cars. China is expected to be the largest market for connected cars due to a positive economic outlook.
• Japan and Korea: In spite of technological advancements, these countries lag in the connected car space.

"As North America and Europe are generating ROI from connected, automated and mobility-related services, OEMs are focusing on introducing the same experience in emerging regions," noted Kumaramanickavel.

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Global Connected Car Market Outlook, 2017
MCEF-18

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