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Emerging Applications for the Connected Car Market

When consumers think about purchasing a new car, they typically give consideration to features that accommodate their lifestyle choices. In 2016, and beyond, wireless connectivity will be a key factor. Besides, the Internet of Things (IoT) phenomenon will be driven by compelling use-cases, not technology.

ABI Research is reporting that the global penetration of embedded and hybrid factory installed OEM telematics within new passenger automobiles will exceed 72 percent by 2021. Growth will mainly be driven by key volume car OEMs in the North America, European Union, and China markets.

Car brands within these markets showing accelerated growth include GM, which expects to reach 12 million OnStar subscribers globally by the end of 2016, including its Opel brand in Europe and Cadillac in China; and Ford, which claims to have already 15 million SYNC-equipped vehicles on the road worldwide.

Connected Car Market Development Trends

"While lower cost hybrid approaches remain attractive to end users, a clear trend toward embedded solutions can be observed, as illustrated by Ford's recently announced SYNC Connect," says Dominique Bonte, vice president at ABI Research.

At the same time, Bonte believes that embedded solutions are made more affordable through shared data plans, allowing customers to avoid purchasing a separate connected car data plan by adding their vehicle to existing mobile internet plans for smartphones.

According to the ABI assessment, the rising embedded solutions trend is resulting in fierce competition among mobile network service providers that are trying to capture lucrative connected car market share in an increasingly saturated environment.

While in the U.S., AT&T and Verizon are pitched against each other, Vodafone, T-Mobile, and Telefonica are competing in Europe. Meanwhile in China, major telecom carriers are also actively targeting the emerging automotive services segment.

Applications Becoming the Key Market Drivers

The ongoing growth of OEM connected car solutions is due to a number of factors, which include eCall mandates in the EU and Russia, increasing user awareness about safety, and improved value propositions through additional services -- such as UBI, preventive maintenance, and remote control capabilities via smartphones and wearable devices.

Additionally, ABI Research anticipates next-generation use cases, such as vehicles used as delivery locations and Car-to-Home applications, to start gaining momentum and increase the perceived value of connected car offers from automobile manufacturers like Volvo, Ford, BMW, and Toyota.

"Despite major market growth in OEM telematics, though, cyber security continues to remain a challenge," concludes Bonte. "To overcome this obstacle, many car OEMs are implementing over-the-air software capabilities, which in itself is expected to become a major growth driver for vehicle connectivity in the future."

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