Automotive Software Market Likely to Enjoy Explosive Growth in Years to Come

Owing to urbanization, the demand for connected cars has increased significantly over the past few years. Take for instance the connected car market, which reached a value of about $72.5 billion in 2019. The demand for these cars is major increasing because of the surging concerns regarding security and safety, introduction of IoT in the automotive industry, and need for improved driving experience. IoT provides a number of advanced connectivity solutions and infotainment services for drivers.

Ascribed to this rising demand for connected cars, the automotive software market is registering significant growth as well. Automotive software include a number of requirements, such as cyber security, safety, performance, usability, and adaptability. It cover a wide array of applications from embedded real-time firmware to secured cloud solutions. The introduction of advanced technologies for improved user interface is also a major factor that is leading to the growing need for automotive software.

In addition to making vehicles more technically capable, it is also important to design technologies in such a way that they are more human and personal. For example, Model S by Tesla Inc. has some physical controls near or on the steering wheel, while majority of secondary function do not have any designated physical control. These functions can be accessed via a 17-inch touchscreen display that is placed on the dashboard of the vehicle. Interfaces like these need software for technology integration, which is leading to the growth of the automotive software market.

The global automotive software market is predicted to reach a value of $78,894.2 million by 2030, increasing from $28,214.6 million in 2016, advancing at a 12.4% CAGR during the forecast period (2020–2030). On the basis of software, the market is divided into OS and middleware, ADAS and autonomous driving (AD), body & energy, infotainment, connectivity, security, & connected services, and powertrain & chassis. Out of these, the ADAS and AD division accounted for the largest share of the market in the past.

Technologies such as automatic braking, lane assist, and ADAS considerably improve the driving experience, thereby making it safer than ever. These technologies further aid in decreasing traffic rule violations, which, in turn, leads to decline in the road accidents and improvement of the driver experience. Moreover, various companies are taking up R&D activities for deploying autonomous car that are majorly dependent on this software. These efforts for deploying ADAS and AD is positively impacting the market.

Geographically, the Asia-Pacific region held the major share of the automotive software market during the historical period (2014–2019), according to a P&S Intelligence report. The region is the major market for vehicles, along with which, the advancing economy and increasing purchasing power of customers is leading to growing need for advanced features in vehicles. The rising integration of advanced application, including auto-park assist, human-machine interface, and keyless entry, are creating need for automotive software in the region.

Hence, the market is growing due to the rising deployment of connected cars and technological advancements for enhancing user interface.

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