The connected car market is set to soar over the next few years, shaking up the automotive industry.
A new report from PwC’s strategy consulting business, Strategy&, predicts that the worldwide value of the connected mobility market will increase threefold from around £40bn in 2017 to £120bn in 2022. That’s an annual growth rate of around 25%.
But vehicle manufacturers will be competing with technology companies for leadership in this growing market, and must increase the pace of innovation or risk losing their position, PwC claims.
“While the overall connected mobility market is growing rapidly, the mix is shifting, with a decline in the navigation and entertainment systems which have been the mainstay for OEMs, coupled with the spread of connectivity further into the more price sensitive mass market,” explained Rich Parkin, UK automotive partner at Strategy&. “In the short- to medium-term, suppliers of technology and mobility and digital services are the ones set to profit most from the budding connected car market.”
By 2022, two in every new three cars sold will be equipped with connected car technology, says Strategy&. As revenues and profits shift from hardware to software, and from products to services, industry leadership is predicted to shift to new firms.
“Despite major manufacturers increasing their development budgets by 8% compared to the previous year and realigning their focus, they are still often being overtaken by newcomers,” Parkin pointed out. “To capitalise on the opportunity, traditional carmakers will need to not only take advantage of the latest technologies, but also significantly accelerate their rate of innovation. This will often mean altering their culture, management styles, approach to mergers and acquisitions, and recruitment to keep pace with the smaller and more nimble contenders.”