Market potential of passenger cars projected to quadruple by 2020

Self-driving cars and new safety features to fuel this boom

London, September 1, 2014 - By 2020 the market potential of internet connected cars will increase from £25 billion to over £92 billion according to management consultancy Strategy&, a member of the PwC network of firms, who in cooperation with the Center of Automotive Management (CAM), have today released in the UK the results of a study which explores future trends in the automotive industry.

Much of the £92 billion volume will be driven by new developments in safety and the delivery of self-driving cars - with autonomous driving expected to increase from £6 billion to £28 billion and the market for new safety applications expected to rise from £10 billion to £38 billion.

Jens Nackmayr, Operations Partner at Strategy&, notes: “The automotive industry like many others is shifting its focus to meet changing consumer demands - this means an inevitable shift towards greater connectivity in the consumer market segment. The car of the future will be communicating constantly with its environment, with other vehicles and with the home. This development is opening up incredible growth potential for car manufacturers (OEMs). Safety applications and autonomous driving will be the hot topics over the coming years.”

Other key issues highlighted include the challenge of navigating data privacy, geo-locational tracking, and current traffic laws within a legal framework which is still being defined for internet connected cars. And the expected decline in proprietary standards, in other words closed operating systems in vehicles, as OEMs and digital players must start to work more closely together to remain competitive.

Prof. Stefan Bratzel from the Center of Automotive Management said: “Automotive OEMs will continue to see the connected car as their natural sphere of activity and will strive to establish themselves at the essential points of control. But any company hoping to successfully implement digital business concepts rather than offering unattractive “island solutions” will have to rely on cooperation with the digital players. The keyword here is ‘coopetition’, namely cooperation between competitors.”

Additionally data security will also be a key challenge as digital networking of cars opens the gates to cyber attacks. Connectivity can provide access for hackers, for example. The flow of data to the backend can be intercepted or manipulated. Various devices linked to the vehicle, such as cell phones or tablets, can also provide considerable scope for attacks through their interfaces. There is also the risk that the connected car could be used as a mobile server for a botnet, in other words automated computer programs – computers on the move could attack remote-controlled servers anywhere in the world. The effects of a successful attack on the connected car could be fatal. The risks are many and varied – including manipulation of the brakes, surreptitious creation of movement profiles and remote-controlled opening of door locks.

“Given this background, data security is a central R&D issue for the connected car. Appropriate measures must be an integral part of the R&D roadmap”, according to Felix Kuhnert, Partner and Head of the Automotive Germany and Europe Division at the auditing and consulting company PwC.

Strategy& Partner Richard Viereckl sums up the situation as follows: “In terms of networked mobility, we are on the threshold of some exciting and momentous developments. And obviously none of the market players is holding back. After all, this is nothing less than one of the markets of the future in the mobility sector. If you take your foot off the accelerator now you’ve already lost.”

Design of the Connected C@r study
For this study, Strategy&, the Center of Automotive Management (CAM) and PwC Autofacts analyzed the product portfolios of the world’s leading OEMs and suppliers. The second stage of the study involved an investigation of research and development pipelines and trials to determine the current development status of connected cars. On the basis of the resulting lists of functions, the attraction of the functions for end customers was assessed by a team of experts using the Kano model, and these findings were then used to determine the earnings potential for manufacturers. Note – this study explores passenger vehicles only and excludes light commercial vehicles .

As part of the market analysis, Strategy& investigated seven key clusters of functions across the Connected Car including: Mobility Management, Vehicle Management, Entertainment, Home Integration, Well-being, Safety, and Autonomous Driving.

* Connected Car - a Connected Car is the term given to vehicles which have internet or wireless network access allowing them to connect with other devices both inside or outside the vehicle.

* Figures have been converted from Euro to British Pound and rounded to the nearest whole figure for the UK market on 28 August 2014.

Contact Martina Mazzon
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