The connected car is global in scope, with an array of pilots and studies expected to roll out a number of connectivity features across the next five years, which will shape the next thirty years of development. Many key car makers embraced the world of financial services, as a mechanism for supporting sales of their vehicles. Now manufacturers and their suppliers are moving towards data and mobility management and white-labelling solutions. The connected car is a core element of this strategic change.

Macroeconomic Trends

Listed below are the key macroeconomic trends impacting the connected car theme, as identified by GlobalData.

Strategic partnerships

Strategic partnerships are becoming a key way for automotive companies to navigate the new world of mobility as they move outside of their traditional core competencies. A large chunk of the mergers and acquisitions dollars from the tech titans chased patents and intellectual property (IP) developed by start-ups. Since 2010, more than 100 deals have been closed, largely in the form of ‘aqui-hire’ (i.e. acquiring a company in order to hire the staff).

The number of strategic partnerships will continue to grow for the next decade as traditional suppliers and manufacturers attempt to familiarise themselves with cutting-edge connected car technologies and improve their competitive advantage.

Urbanisation

People all over the planet are increasingly migrating to cities. By 2050, it’s estimated that two-thirds of the world’s population will be living in cities.

Increasing urbanisation presents a real issue for the automotive industry. Owning personal transport in concentrated urban environments becomes increasingly complicated due to parking issues, usage restrictions, the availability of internet shopping, insurance costs, competing public transportation and increasing mobility as a service (MaaS) options.

All these urbanisation factors, alongside developing demographic and societal issues, contribute to peak car theory, which states that market volume is on its way to peaking and demand will decline. However, though the volume of privately owned vehicles will decline, connected vehicle technologies will become even more relevant.

Increased urbanisation, and the need for more sustainable transportation, has been a major driver in automakers hedging their bets in MaaS investments and has proved attractive to new industry entrants too.

Emerging economies

Emerging and fast-moving economies have an opportunity to push ahead of more established markets. It is far easier to instrument and connect infrastructure as it is being built than it is to retrofit instrumentation and connectivity into legacy infrastructure. Over the next two decades, hundreds of megacities will emerge in the Middle East, Asia, and China. In Indonesia alone 27 new cities are planned.

Covid-19

Within the connected car industry, the Covid-19 pandemic has brought both market impact and new opportunities. Given the longer-term nature of much of this interdisciplinary field, it has fared positively, despite the temporary suspension of various testing, due to the lockdown measures. However, economic distancing from China has encouraged governments in Europe and North America to invest more heavily into this veritable future industry.

This is an edited extract from the Connected Car – Thematic Research report produced by GlobalData Thematic Research.