Automotive Software Market Analysis APAC,Europe,North America,South America,Middle East and Africa - US,Canada,China,Japan,Germany - Size and Forecast 2023-2027

Automotive Software Market Forecast 2023-2027

The automotive software market size is estimated to grow by USD 12.75 billion at a CAGR of 9.25%  between 2022 and 2027. The automotive software market's growth is driven by various factors, notably the increasing demand for unique in-car experiences and the integration of advanced safety technologies in luxury vehicles. This includes the introduction of sophisticated infotainment systems that enhance the driving experience. These systems serve as instructions enabling user interaction with in-vehicle hardware, facilitating control functions within the vehicle. As consumers seek more personalized and technologically advanced features in their cars, the market continues to evolve, offering innovative solutions to meet these demands and enhance overall driving satisfaction and safety.

What will be the size of the Automotive Software Market During the Forecast Period?

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Market Dynamics

This market focuses on developing software solutions for various automotive applications, including comfort, control, communication, and connectivity. The integration of 5G technology in automotive software is a game-changer, enabling real-time data transfer and advanced driver assistance systems. The market caters to both passenger cars and commercial vehicles, with a growing emphasis on electric vehicles and autonomous driving. The embedded devices and systems play a crucial role in the functionality and performance of these software solutions. The market is expected to grow significantly due to the increasing demand for advanced features and the integration of IoT and AI technologies.The trend towards electric and autonomous vehicles is further fueling the growth of the automotive software application market. Companies like Aptiv and Valéo are also investing heavily in the development of software solutions for these emerging vehicle types. Overall, the automotive software market is poised for continued expansion as technology continues to revolutionize the automotive industry.

Key Driver

The growing demand for differentiated in-car experiences is driving growth in the market. The global automotive industry is experiencing rapid changes in dynamics, whether it is from the buyer's end or the supplier's perspective The advancements in automotive technology and the increasing integration of electronics in vehicles. The penetration of driver assistance technologies and connected services has been on the rise in the last decade. Customers seek differentiated features, leading automakers, suppliers, and technology firms to innovate. Factors such as fuel consumption, maintenance costs, and downtime have become critical concerns, driving the demand for highly advanced applications. Propulsion type, electrification, and autonomous driving are key trends shaping the market.

Developing economies and environmental issues, including climate change and air pollution, are also influencing the market. Software applications, vehicle connectivity, telematics services, remote diagnostics, real-time traffic information, and software updates are essential components of the automotive software market. Sensors, navigation, operating systems, powertrain control, and autonomous driving features are also crucial. The market is highly competitive, with automakers, suppliers, and technology companies offering solutions for electric vehicles (EVs), engine management, emission control, transmission control, and battery technology to address EV range and charging times. The Global Market is highly competitive due to advances in technology and an increase in the penetration of electronic components in-vehicle applications. The digital services provided by automotive OEMs in modern vehicles, such as telematics services, are based on the cloud platform. 

This enhances both vehicle performance and scalability. The OEM also cooperates with car software suppliers due to the increased demand for technical improvements in-vehicle applications. The growing partnerships among vendors will propel the global market during the forecast period. 

Latest Trends

The over-the-air (OTA) updates for software components is a primary trend in the market. Electronic components of cars are increasing exponentially over the last few years. This is due to the increased installation of driver assistance and safety features in automobiles. The most important part of a car today is electronics hardware and software. Due to the increased number of ECUs and program implementation, there is a growing need for software updates in cars. As the number of connected devices increases, it may not be cost-effective for OEMs to provide software updates via their dealers. 

The integration of driver assistance technologies and connected services has led to a significant increase in the electronic content of vehicles. This trend is driven by the adoption of highly advanced applications such as engine management, emission control, transmission control, and autonomous driving features. With the rise of electrification and the proliferation of electric vehicles (EVs), there is a growing need for software updates to address issues related to battery technology, EV range, and charging times. Customers demand convenience and cost-effectiveness, making it impractical for original equipment manufacturers (OEMs) to provide software updates solely through dealers. Instead, over-the-air (OTA) updates and remote diagnostics are becoming increasingly popular.

The automotive software market encompasses various applications, including powertrain control, navigation, operating system (OS), and telematics services. Autonomous driving, fuel consumption, maintenance costs, and downtime are significant concerns for both automakers and customers. Developing economies are also embracing the automotive software market, with a focus on improving vehicle connectivity, real-time traffic information, and sensor technology. Technology companies and suppliers are collaborating to address environmental issues, such as climate change and air pollution, by optimizing software applications for various propulsion types. Such initiatives are expected to drive the growth of the market focus during the forecast period.

Major Restraint

The hacking and data security issues in the space are a challenge in the market. Automotive telematics applications in IVI use wireless communication systems that are prone to hacking and theft of information. Iintegration of advanced driver assistance technologies (ADAS), infotainment systems, telematics, and electrification has brought about intricate software development challenges. With the increasing emphasis on safety-critical applications, delivering defect-free and efficient software is paramount. The presence of various APIs, SDKs, and non-standardized platforms necessitates customized solutions for each propulsion type, including internal combustion engine (ICE) , hybrid vehicles, and electric vehicles (EVs). Connected services, such as remote diagnostics and real-time traffic information, add to the production costs for automakers and suppliers. Customers expect zero downtime and optimal fuel consumption, which further complicates the development process.

Environmental issues, including climate change and air pollution, necessitate advanced emission control and engine management systems. Battery technology, EV range, and charging times are crucial factors in the electrification of the automotive industry. Highly advanced applications, such as autonomous driving features and powertrain control, require sophisticated software applications and operating systems (OS). Developing economies and technology companies are also contributing to the growth of the automotive software market.

The automotive software market encompasses various applications, including vehicle connectivity, telematics services, navigation, sensor integration, and autonomous driving features. Automakers, suppliers, and technology companies collaborate to address the complexities of software development, ensuring a seamless user experience for customers.User information may be compromised by any unauthorized access to applications and personal data, such as passwords and usernames, which may lead to personal information losses. 

Market Segmentation

The Automotive Software Market is a significant and growing sector, with key players such as 5G TECHNOLOGIES, Automate.ai, and BodyLogicVehicleSystems making strides in the industry. These companies offer various solutions, including predictive maintenance, vehicle diagnostics, and connectivity services. The market is driven by the increasing demand for advanced technologies in the automotive industry, such as the Internet of Things (IoT) and artificial intelligence (AI). The use of these technologies enables real-time vehicle monitoring, improved safety features, and enhanced customer experiences

By Application

The market share growth by the safety system segment will be significant during the forecast period. Due to legislation that mandates their installation in automobiles, there has been an increasing demand for safety systems on vehicles. Some of the regulatory mandates are in order to reduce back-over incidents, the National Highway Transportation Safety Authority (NHTSA) of the US. 

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The safety segments showed a gradual increase in the market share of  USD 5.34 billion in 2017 and continued to grow by 2021. The automotive software market is experiencing significant growth due to the increasing integration of driver assistance technologies and connected services in the automotive industry. Regulatory mandates, such as the installation of rear-view cameras and eCall systems, are driving this trend. Highly advanced applications, including tire pressure monitoring systems, adaptive cruise control, blind-spot detection, and lane-departure warning systems, are becoming standard features for customers. Fuel consumption and maintenance costs are key concerns for both traditional internal combustion engine (ICE)  vehicles and electric vehicles (EVs).

Autonomous driving, electrification, and vehicle fleet management are major areas of focus for automakers, suppliers, and technology companies. Engine management, emission control, transmission control, and powertrain control are essential functions addressed by software applications. Developing economies are adopting these technologies to address environmental issues related to climate change and air pollution. Battery technology, EV range, and charging times are critical factors in the adoption of EVs. Software updates, sensors, navigation, and real-time traffic information are essential connected services for enhancing the driving experience and reducing downtime. Operating systems and autonomous driving features are key areas of innovation in the market.

Moreover, there has been an increasing demand for infotainment systems in the mid-segment and mass-produced segment, which was earlier limited to premium vehicles. The growth of the middle class in developing economies, such as India and China, is a key reason for changing consumer preferences. As a result of sustained economic growth, these economies have seen an increase in disposable income. Hence, there has been an increased demand for luxury and premium vehicles with high-end infotainment systems. The increased adoption of in-vehicle infotainment systems and telematics solutions is driving the demand for associated software.

By Product

The application software segment will account for the largest share of this segment. Nowadays vehicles are able to house a couple of OS due to the multiplied adoption of rear-seat infotainment structures and technological advances inside the system-on-chip (SoC) industry. Although many vehicles use the same installed automotive-grade Linux variant OS for both controls as well as infotainment functions, the demand for systems capable of housing twin OS will gain traction during the forecast period due to the strong growth in the luxury vehicle segment. Original equipment manufacturers (OEMs) are partnering with other technology providers and platform providers to develop self-driving cars, which will also drive the growth of the application software segment of the global market during the forecast period.

The market is experiencing significant growth due to the integration of advanced technologies such as 5G, autonomous vehicles, and electric vehicle (EV). Automotive software encompasses various applications, including body control, infotainment, telematics, and communication applications. The use of multiple operating systems (OS) in vehicles, particularly in luxury and premium passenger cars and commercial vehicles, is becoming increasingly common. This trend is driven by the need for advanced safety features like lane-keeping assistance, adaptive cruise control, and collision avoidance, as well as comfort-enhancing applications. Embedded systems in automotive software enable programmable instructions for car-to-car communication and autonomous driving. Automobile manufacturers like Valeo are investing in software services and advanced infotainment systems to differentiate their products. Propulsion type, including electric vehicle (EV) and conventional, also influences the demand for automotive software. Safety features, predictive maintenance, and communication applications are key areas of focus in this market.

Middleware is a very crucial part of any computer system as it is the only component that enables the OS to recognize other input and output devices. Without middleware, the whole system will be crippled. This segment is expected to witness robust growth due to the increased electronics content in automobiles (The increase in ECUs will influence the embedded software market as each ECU is programmed with embedded software), Rising demand for driver assistance systems, and the middleware in infotainment systems. Thus, the rising demand for infotainment systems will also influence the automotive middleware market.

Regional Overview

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APAC is estimated to contribute 40% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The automotive software market in APAC is projected to grow faster than in Europe and North America, driven by the increasing demand for IVI systems and safety features in emerging markets like India, China, Thailand, and Indonesia. Factors fueling this growth include improving economic conditions, rising disposable income, and shifting consumer preferences. Key technologies and applications include 5G technology, autonomous vehicles, body control, infotainment, telematics, comfort, communication applications, car-to-car communication, and safety features such as lane-keeping assistance, adaptive cruise control, and collision avoidance. Automobile manufacturers and suppliers like Valeo are investing in software services and advanced infotainment systems for passenger cars and commercial vehicles, with a focus on programmable instructions, embedded systems, and predictive maintenance.

The growth of the market in APAC will outpace the growth of the market in Europe and North America during the forecast period. Although adoption rates for ADAS and IVI systems are still low, the market is expected to show strong growth over the forecast period. This is attributed to the growing demand for IVI systems and shifting consumer preferences toward passenger safety in emerging markets such as India, China, Thailand, and Indonesia.

Market Customer Landscape

The market forecasting industry report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

Global Market Customer Landscape

Who are the Major Automotive Software Companies?

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

Access Co. Ltd. - The company offers automotive software such as NetFront Browser BE is an advanced HTML5 solution that provides In-Vehicle Infotainment platforms with a comprehensive platform to offer services via standardized HTML5 rather than operating system-specific binaries or applications.

Airbiquity Inc. - The company offers automotive software such as OTAmatic Software Management Platform to receive remote over-the-air software updates and transmit diagnostic and operational data from onboard systems and components.

Alphabet Inc. - The company offers automotive software through its subsidiary Google such as Android Automotive OS is an infotainment platform built into cars by car makers.

The research report also includes detailed analyses of the competitive landscape of the market and information about 15 market players, including:

• Bittium Corp.
• BlackBerry Ltd.
• Elinext IT Solutions Ltd.
• Green Hills Software LLC
• Hitachi Ltd.
• Information Technologies Institute Intellias LLC
• Intel Corp.
• KPIT Technologies Ltd.
• Microsoft Corp.
• NVIDIA Corp.
• NXP Semiconductors NV
• Renesas Electronics Corp.

Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.

Research Analyst Overview

The Market is propelled by advancements in body control, comfort, and Advanced Driver Assistance Systems (ADAS), catering to connected car services and innovative technologies. Standard protocols and connected infrastructure enable troubleshooting and maintenance, enhanced by Artificial Intelligence (AI) and predictive capabilities. Vehicle connectivity, IoT devices, and voice commands improve user interfaces, while data monetization drives revenue opportunities. From semi-autonomous to autonomous vehicles, the technology supports various autonomy levels and in-vehicle electronics architectures, with leading OEMs and mobility players investing in ADAS and infotainment systems.

Regulatory developments and changing consumer behavior underscore the importance of crash-avoidance technology and self-driving car features, leveraging radar sensors, parking sensors, and cameras for safety and stability controls. Tier 1 companies and software development vendors collaborate with Internet-of-Things technology providers like Aeris and Dealer-FX to drive innovation and meet evolving market demands, particularly in regions like Asia-Pacific and LAMEA.

Segment Overview

The market report forecasts market growth and forecasting by revenue at global, regional & country levels and provides a market analysis and report of the market growth and trends opportunities from 2017 to 2027. 

• Application Outlook
  • Safety system
  • Infotainment and telematics
  • Powertrain
  • Chassis

• Product Outlook
  • Application software
  • Middleware
  • Operating system

• Region Outlook
  • North America
    • The U.S.
    • Canada
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa
  • South America
    • Chile
    • Argentina
    • Brazil

Industry  Scope
Report Coverage	Details
Page number	177
Base year	2022
Historic period	2017 - 2021
Forecast period	2023-2027
Growth momentum & CAGR	Accelerate at a CAGR of 9.25%
Market growth 2023-2027	USD 12.7 billion
Market structure	USD Fragmented
YoY growth 2022-2023(%)	8.56
Regional analysis	APAC, Europe, North America, South America, and Middle East and Africa
Performing market contribution	APAC at 40%
Key countries	US, Canada, China, Japan, and Germany
Competitive landscape	Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks
Key companies profiled	Access Co. Ltd., Airbiquity Inc., Alphabet Inc., Bittium Corp., BlackBerry Ltd., Elinext IT Solutions Ltd., Green Hills Software LLC, Hitachi Ltd., Information Technologies Institute Intellias LLC, Intel Corp., KPIT Technologies Ltd., Microsoft Corp., NVIDIA Corp., NXP Semiconductors NV, Renesas Electronics Corp., Robert Bosch GmbH, Samsung Electronics Co. Ltd., Schaeffler AG, Siemens AG, and Sigma Software
Market dynamics	Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, Market growth and Forecasting, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period
Customization purview	If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.

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What are the Key Data Covered in this Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the growth of the market between 2023 and 2027
• Precise estimation of the market in focus on the parent market
• Accurate predictions about upcoming market trends and analysis and changes in consumer behavior
• Growth of the market industry across APAC, Europe, North America, South America, and the Middle East and Africa
• A thorough market growth analysis of the market’s competitive landscape and detailed information about vendors
• Comprehensive analysis of factors that will challenge the market research and growth of market vendors

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