CAGR: 13.9%Current Market Size: 22.01 BillionFastest Growing Region: North America
Largest Market: APACProjection Time: 2022-2029Base Year: 2021
The global Automotive Software market is expected to grow from USD 22.01 billion in 2021 to USD 61.31 billion by 2029, at a CAGR of 13.9% during the Projection period 2022-2029. This growth of the market is driven by the increased adoption of AI in the automotive industry and the growing number of connected cars.
The mobility industry has witnessed technological advancements with software applications and Artificial Intelligence (AI) integration. These automotive software solutions comprise wide-ranging tools for performing computer-based in-vehicle operations. It interacts with hardware components, controls functions, and augments the experience of operating a motor vehicle. Also, it helps implement the car's functionality that runs on the essential processors, sensors, and memory. This software includes telematics, infotainment, body control & comfort, powertrain, communication, and advanced driver assistance systems (ADAS) software. Such software solutions are transforming car capabilities, creating development challenges for various automotive players.
On the other hand, modern automotive software provides improved customer satisfaction, additional hardware connectivity, reliability and flexibility, increased safety, enhanced control systems, infotainment, and many other car features.
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Market Dynamics:
Drivers:
Artificial intelligence (AI) is rapidly being implemented across automotive manufacturing, including design, production, supply chain, and post-production. In addition, it is rapidly being integrated with driver assistance and risk assessment systems. Owing to such functionality, OEMs plan to develop their automotive software solutions. For instance, in January 2022, Toyota announced its plans to build its automotive software solutions for its vehicles by 2025 to compete with German rivals, Daimler AG and Volkswagen AG. Hence, the need for AI and deep learning-based solutions to enable the OEMs to enhance efficiencies significantly and make faster data-driven decisions have boosted the growth of the automotive software market.
Advanced driver assistance systems (ADAS) have been considered the essential component across the evolution of in-vehicle technology. These systems mainly focus on collision avoidance technologies and driver aids, such as night vision, adaptive cruise control, and driver alertness. Such features boost the adoption of ADAS to avoid accidents altogether or reduce the risk of injuries during a crash. This has led to the demand for ADAS software solutions that collect and validate data from sensors to detect the vehicle’s surroundings and enable immediate actions. In addition, the ADAS industry players are actively innovating their offerings with enhanced software. For instance, in January 2020, Hella, the German automotive part supplier, and Oculii, the US start-up, collaborated to develop high-performance, scalable radar software for ADAS. Therefore, an upsurge in adopting ADAS features in vehicles has driven the global automotive software market.
Restraints:
Rugged, high-speed, and agile in-vehicle data networks are essential in achieving connected, seamless, feature-rich automotive software solutions. However, the emergence of 5G wireless data has the potential to meet the demand created by intelligent and autonomous driving by allowing faster data rates along with the secured vehicle-to-infrastructure (V2X) and vehicle-to-vehicle (V2V) connectivity. However, 5G and high-speed wireless connectivity require high-priced infrastructure. Hence, the lack of connected infrastructure due to the need for high investment is the prominent factor affecting the growth of the global automotive software market.
Opportunities:
There is a huge trend in software-driven automotive R&D due to the proliferation of in-vehicle infotainment (IVI), advanced driver assistance systems (ADAS), and information systems. Thus, OEMs are planning to step up and enhance their software capabilities over the next few years. For instance, in December 2021, The Volkswagen Group introduced its strategy for the coming decade with an investment of about $100.5 billion in future technology. Out of this investment, around $30.51 billion is projected to be spent on software development associated with automotive. Such investment in software development in the automotive industry is opportunistic for the growth of the global market.
Challenges
Cyber security risk is the probability of loss or exposure resulting from a data breach or cyber-attack on software systems. The increased number of connected vehicles on the roads has created software vulnerabilities that have become accessible to malicious hackers using cellular networks and Wi-Fi. Cyber attackers can also target data generated, collected, stored, and shared by vehicles. Hence, the cyber security risk has posed significant challenges to the global automotive software industry players.
Segmentation Analysis:
The global automotive software market has been segmented based on application, vehicle type, software layer, EV application, EV Gear Type, and regions.
By Application
The application segment includes ADAS and safety systems, body control and comfort systems, powertrain systems, infotainment systems, communication systems, and telematics systems. The ADAS and safety systems segment led the automotive software market with a market share of around 28.05% in 2021. This is attributed to the need for software applications in ADAS and safety systems to avoid accidents or reduce the risk of injuries during a crash. These systems comprise various lucrative functions such as automatic emergency braking, surround view, parking assist, pedestrian detection, gaze detection, and driver drowsiness detection, among others. In addition, the ongoing software development trend in the ADAS and safety systems sector has further boosted the growth of this segment. For instance, in September 2020, Algolux, a provider of perception software solutions for safety-critical applications, launched the next generation of its Eos Embedded Perception Software for ADAS and autonomous vehicles applications.
By Vehicle Type
The vehicle type segment includes passenger cars, LCVs, and HCV. The passenger car segment led the Automotive Software market with a market share of around 61.2% in 2021. This growth is mainly driven by the fact that software services have a higher penetration in passenger cars than commercial vehicles. In addition, there is enormous demand for advanced applications such as ADAS and connected vehicles in developed countries. Moreover, the rise of vehicle-to-infrastructure (V2I) and vehicle-to-vehicle (V2V) communications along with the emergence of semi- and fully autonomous passenger cars, has further created lucrative growth opportunities for the automotive software market.
By Software Layer
The software layer segment includes an operating system, middleware, and application software. The application software segment led the automotive software market with a market share of around 52.7% in 2021. The rising demand for innovative safety features in self-driving and automated vehicles has boosted the demand for application software. In addition, several automotive software providers and OEMs are integrating artificial intelligence and deep learning technologies to increase vehicle comfort, efficiency, and protection. For instance, in September 2021, Maruti Suzuki India Limited launched an AI-based 24x7 virtual car assistant app for NEXA, a premium car channel from Maruti Suzuki. This integration of AI with automotive application software is projected to be opportunistic for the growth of the global market.
By Regional Analysis:
The regions analyzed for the Automotive Software market include North America, Europe, South America, Asia Pacific, and the Middle East, and Africa. The Asia-Pacific region dominated the Automotive Software market and held a 40.1% share of the market revenue in 2021.
Global Automotive Software Market- Country Analysis:
Germany's Automotive Software market size was valued at USD 2.42 billion in 2021 and is expected to reach USD 6.65 billion by 2029, at a CAGR of 13.7% from 2022 to 2029. Germany is one of the leading nations in the mechanical engineering, manufacturing, automotive, and electrical industries. In addition, the government in this country is actively focusing on introducing new supportive regulations for operating autonomous motor vehicles in Germany. This is the primary factor contributing to the demand for automotive software in the country.
In addition, according to Germany Trade & Invest, the economic development agency of the Federal Republic of Germany, this country is the leading automotive market in Europe, accounting for about 25% of all passenger cars manufactured in the region. This huge market for passenger vehicles is opportunistic for the market's growth.
China's Automotive Software market was valued at USD 3.74 billion in 2021 and is expected to reach USD 10.06 billion by 2029, at a CAGR of 13.4% from 2022 to 2029. China is the world’s largest light-vehicle manufacturer. In addition, this country is a leading automotive producer, consumer, and exporter. For instance, the country continues to be the largest vehicle market by manufacturing output and annual sales, with domestic production anticipated to reach 35 million vehicles by 2025.
On the other hand, countries such as the U.S., EU, Japan, and South Korea are heavily investing in electric vehicles and autonomous vehicles technology. These investments are projected to create lucrative growth opportunities for the automotive software market. For instance, in 2021, the country saw more than $8.5 billion investments in robotaxi startups, smart electric car manufacturers, and self-driving truck developers.
India's automotive software market size was valued at USD 1.10 billion in 2021 and is expected to reach USD 3.11 billion by 2029, at a CAGR of 14.1% from 2022 to 2029. India is one of the strongest growing economies in Asia. In addition, the emerging popularity of ADAS and connected vehicles in this country is expected to create lucrative growth opportunities for the market. On the other hand, the OEMs in the automotive industry in this country are actively integrating software applications in their vehicles. For instance, in February 2022, Mahindra & Mahindra Ltd. collaborated with BlackBerry to integrate its QNX Neutrino Realtime Operating System (RTOS) and QNX Hypervisor solutions with a Cockpit Domain Controller (CDC) of the next-generation XUV700 SUV.
Key Industry Players Analysis:
To increase their market position in the global Automotive Software business, top companies are focusing on tactics such as adopting new technology, mergers & acquisitions, product developments, collaborations, and partnerships, joint ventures, etc.
Latest Development:
Report Metrics
Report Attribute |
Details |
Study Period |
2021-2029 |
Base year |
2021 |
CAGR (%) |
13.9% |
Market Size |
22.01 Billion in 2021 |
Projection period |
2022-2029 |
Projection unit |
Value (USD) |
Segments covered |
Application, Vehicle type, Software layer, EV application, and regions |
Report Scope |
Revenue Projection, competitive landscape, company ranking, growth factors, and trends |
Companies covered |
Robert Bosch, NVIDIA, NXP, BlackBerry, Elektrobit, Renesas Electronics, Airbiquity, Wind River Systems, Green Hills Software, and Microsoft Corporation among others |
By Application |
|
By Vehicle Type |
|
By Software Layer |
|
By EV Application |
|
Regional scope |
|
Scope of the Report
Global Automotive Software Market by Application:
Global Automotive Software Market by Vehicle Type:
Global Automotive Software Market by Software Layer:
Global Automotive Software Market by EV Application:
Global Automotive Software Market by Region:
Global Automotive Software market will grow at rate of CAGR of 13.9% during the Projection period 2022-2029 and it will reach to USD 61.31 billion by 2029
The global Automotive Software market was USD 22.01 billion in 2021
Leading market players active in the global Automotive Software market are Robert Bosch, NVIDIA, NXP, BlackBerry, Elektrobit, Renesas Electronics, Airbiquity, Wind River Systems, Green Hills Software, and Microsoft Corporation among others.
global Automotive Software market has been segmented based on application, vehicle type, software layer, EV application, and regions.
Increased adoption of AI in the automotive industry and growing number of connected cars is primarily driving the growth of the Automotive Software market.
Artificial intelligence (AI) is rapidly being implemented across automotive manufacturing, including design, production, supply chain, and post-production. In addition, it is rapidly being integrated with driver assistance and risk assessment systems. Owing to such functionality, OEMs plan to develop their automotive software solutions. For instance, in January 2022, Toyota announced its plans to build its automotive software solutions for its vehicles by 2025 to compete with German rivals, Daimler AG and Volkswagen AG. Hence, the need for AI and deep learning-based solutions to enable the OEMs to enhance efficiencies significantly and make faster data-driven decisions have boosted the growth of the automotive software market.
Political Factors- Germany is one of the leading nations in the mechanical engineering, manufacturing, automotive, and electrical industries. In addition, the government in this country is actively focusing on introducing new supportive regulations for operating autonomous motor vehicles in Germany. This is the primary factor contributing to the demand for automotive software in the country. In addition, according to Germany Trade & Invest, the economic development agency of the Federal Republic of Germany, this country is the leading automotive market in Europe, accounting for about 25% of all passenger cars manufactured in the region. This huge market for passenger vehicles is opportunistic for the market's growth.
Economical Factors- There is a huge trend in software-driven automotive R&D due to the proliferation of in-vehicle infotainment (IVI), advanced driver assistance systems (ADAS), and information systems. Thus, OEMs are planning to step up and enhance their software capabilities over the next few years. For instance, in December 2021, The Volkswagen Group introduced its strategy for the coming decade with an investment of about $100.5 billion in future technology. Out of this investment, around $30.51 billion is projected to be spent on software development associated with automotive. Such investment in software development in the automotive industry is opportunistic for the growth of the global market.
Social Factor- North America is expected to witness a considerable growth rate during the Projection period. An upsurge in demand for autonomous vehicles, along with the easy availability of convenient financing options by the governments to ensure in-house automotive production, has driven the market's growth. In addition, the region is seeing advancements in automated transportation technology and the growing number of government initiatives pertaining to autonomous vehicles, creating growth opportunities for the market.
Technological Factors- Artificial intelligence (AI) is rapidly being implemented across automotive manufacturing, including design, production, supply chain, and post-production. In addition, it is rapidly being integrated with driver assistance and risk assessment systems. Owing to such functionality, OEMs plan to develop their automotive software solutions. For instance, in January 2022, Toyota announced its plans to build its automotive software solutions for its vehicles by 2025 to compete with German rivals, Daimler AG and Volkswagen AG. Hence, the need for AI and deep learning-based solutions to enable the OEMs to enhance efficiencies significantly and make faster data-driven decisions have boosted the growth of the automotive software market.
Environmental Factors- The growth of this market is improving automotive infrastructure in countries such as China, Norway, US, Germany, and Japan, increasing production and sales of automobiles globally, rapidly growing demand for autonomous and connected vehicles, increasing adoption for driver assistance safety system, growing concern over driver and vehicle safety, and the growing demand for environment friendly vehicles. To succeed in this rapidly changing environment, companies should minimize complexity by reducing the effort required to develop and maintain software.
Legal Factors- For instance, in September 2021, Maruti Suzuki India Limited launched an AI-based 24x7 virtual car assistant app for NEXA, a premium car channel from Maruti Suzuki. This integration of AI with automotive application software is projected to be opportunistic for the growth of the global market. For instance, in September 2020, Algolux, a provider of perception software solutions for safety-critical applications, launched the next generation of its Eos Embedded Perception Software for ADAS and autonomous vehicles applications. In February 2022, Mahindra & Mahindra Ltd. collaborated with BlackBerry to integrate its QNX Neutrino Realtime Operating System (RTOS) and QNX Hypervisor solutions with a Cockpit Domain Controller (CDC) of the next-generation XUV700 SUV.
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