• In 2021, 4G cars were 90% of total connected car shipments.
• 5G cars are expected to be a quarter of connected cars by 2025.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – February 15, 2022

The global connected car^[1] market remained resilient in 2021 despite ongoing problems such as semiconductor shortages, production losses, cost inflation, and freight disruption. According to the latest research from Counterpoint’s Smart Automotive Service, 4G-enabled cars are reaching maturity in developed countries like the US, China, Germany, and the UK, alongside the entrance of 5G TCUs, which make use of real-time data transfer and fast cloud-car communication, among other improvements.

The semiconductor supply problem proved to be detrimental to the entire auto industry. OEMs like General Motors and Ford suffered significantly with thousands of cars sitting idle in parking lots waiting for chips to arrive. Such automakers are using a “Build-Shy Strategy” whereby cars are produced with available components and then kept aside until the required resources are acquired to complete them. This can be useful in the short term as it keeps the operations running, but there is no guarantee for how long the cars will remain unutilized. The shortages forced automakers to resort to different ways to minimize losses and avoid disruptions, such as diverting chips/inventory to more profitable models, removing certain features, and increasing vehicle prices. For example, BMW and Renault were selling certain models without digital screens while Nissan and Ford were doing so without navigation systems.

Commenting on the global connected car market’s performance, Senior Analyst Soumen Mandal said, “The shift towards digitization in cars is increasing at a rapid pace and is visible as the global connected car penetration has been on a consistent rise. As countries worldwide further strengthen their 4G network coverage and embrace next-generation cellular technology, we can see more connected cars coming to market with advanced safety and comfort features.”

“The US connected car market grew 16% YoY in 2021 with almost all players except General Motors shipping more connected cars as compared to the previous year. We see a dip in GM’s connectivity penetration thanks to its low overall sales and the removal of certain smart features from its portfolio. GM temporarily halted its ‘Super Cruise’ feature that enabled hands-free driving on highways in its flagship Escalade SUV. Other features that were discarded included auto start-stop, fuel management software, wireless charging, heated seats, and HD Radio in models such as Chevrolet’s Silverado and GMC’s Sierra. Despite the supply chain constraints and chip shortages, GM reported a 3.7% and 47% YoY growth in revenues and profits respectively for 2021. Supply chain disruptions and low inventory forced GM to slip to second place with Toyota moving ahead and becoming the first-ever foreign automaker to lead the US vehicle market.”

Mandal added, “China overtook the US in connected car shipments in 2021 and will continue to dominate the market through 2025. Other notable regions seeing growth include Europe, namely Germany, UK, and France. The increasing new electric vehicle registrations in Europe are a good indicator of the increasing connected car penetration in the region. In 2021, the leading battery electric vehicle (BEV) producer in Europe was Tesla, followed by VW and Renault. As we move towards an electric future, other brands like Hyundai and Fiat, which already have top-selling BEV models in their portfolios, will make the EV market more fragmented by introducing more models.”

In 2021, the automotive industry saw the first global deployment of a 5G-enabled car, BMW’s iX model. It was launched first in Germany in November, followed by shipments worldwide. Commenting from the connectivity perspective, Research Vice-President Neil Shah said, “China, which is already the leader in 5G connected cars due to better network infrastructure and government support, will see new models enter the market in 2022 from brands including Chevrolet, Geely, Buick, Ford, and BMW. Furthermore, 5G car models such as the Arcfox Alpha T, Roewe Marvel R, and Great Walls 3^rd Gen Haval H6, which were launched in 2020, will continue to gain traction. From 2023 onwards, we will see bigger players like SAIC and BAIC entering the market.”

Shah added, “By 2025, however, the 5G car market landscape will shift dramatically as the current global leaders will have penetrated the market with their next-generation offerings. We expect one in four cars to have 5G connectivity by 2025.”

^[1]The connected car data here refers to only passenger cars with embedded connectivity.

The comprehensive and in-depth ‘Global Connected Car Tracker, 2019-2025F’ is now available for purchase at report.counterpointinsights.com. Feel free to reach out to us at press(at)counterpointresearch.com for questions regarding our latest research and insights, or press enquiries.

Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects, and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

Analyst Contacts:

Neil Shah

Soumen Mandal

Fahad Siddiqui

Counterpoint Research

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