4 Signs the Automotive Infotainment Market is About to Explode

June 4, 2015  |  By Michael O'Shea  |       

automotive-infotainment-market-dashboard

Manufacturers are building more intelligence into automobiles every day. Head units are becoming more sophisticated with more features being added all the time. What sells consumers is the cool stuff they can see and touch, like the infotainment system. As auto infotainment systems add more features for reduced costs, the scramble is on for OEMs to stay ahead of the next big infotainment trend to keep pace with the market.

According to ResearchandMarkets, the global infotainment market is expected to continue to grow at a CAGR of 12.26 percent through 2018. Overall, global infotainment sales are expected to hit $14.4 billion by 2016. Much of that growth is being driven by new technology, growing demand from new markets, and growing manufacturer demand for more sophisticated head units in lower priced car models. Demand is building on all fronts, which is why the automotive infotainment market is poised to explode.

If you have been following the infotainment market, then you have seen the market forces that are driving growth. Here are just four of them:

1.    Demand for more intuitive  HMI systems.

People are becoming more comfortable with human-machine interface (HMI) systems and demand is booming for more sophisticated systems. Now that consumers are more comfortable with the intuitive interfaces of their handheld devices and even talking to Siri on their iPhone, they expect that same intuitive convenience in the infotainment systems in their cars.

SandlerResearch, which tracks the Global Automotive Human Interface Market, predicts that the market will continue to grow at a CAGR of 11.25 percent through 2019, only slightly below the CAGR for automotive infotainment. As the research company states:

“One of the key trends in the market is the increased demand for automotive infotainment, which has resulted in a high demand for HMI systems. Infotainment devices used for communication, entertainment, and navigation will influence the demand for telematics devices, ultimately leading to an increased market growth.”

2.       Basic voice interface is gaining in popularity.

Voice is gaining popularity outside the vehicle. In the long run, consumers will expect the same level of interaction inside the vehicle. Voice interface systems are making their way into less expensive vehicles, especially in Europe and North America. By 2019, 70 percent of automobiles in Europe are expected to have some voice interface system, and 75 percent of cars in North America. European shipments of basic voice interface systems should hit 20.5 million units in 2018 and 17.1 million units in North America.

This trend points to an overall increase in sales of more sophisticated infotainment head units..Further, the onus is on car companies to figure out how to deliver a level of ease of use with their voice systems in the vehicle that drives adoption and improves the customer experience.

3.    Less expensive cars will have more sophisticated infotainment systems.

The price reduction in HMI and infotainment systems is making them more attractive for low-end vehicles. Demand for smaller, less expensive compact cars continues to rise with the increase in traffic and the rising price of fuel.

OEMs are working with suppliers to develop low-cost, feature-packed infotainment systems priced for the low- to mid-priced car market. By expanding penetration of infotainment systems into the compact and medium-sized car markets, head unit vendors will be able to contain costs with the help of economies of scale, which means more sophisticated infotainment systems will make their way into less-expensive car models.

4.    Expanding new geographic markets for infotainment head units.

Automotive sales continue to grow in Brazil, Russia, India, China (BRIC) and other countries where the per capita income for the populace continues to climb.

New car sales in Asia are expected to overtake North American and Western Europe by 2020. In fact, India is expected to become the third largest market for passenger cars. With increased car sales will be increased demand for infotainment head units.

Consumer expectation will continue to drive sales of infotainment systems, and as unit prices drop and systems are installed in the next-generation of cars destined for BRIC countries, the market for infotainment head units will continue to boom. And it’s not only growth in low-end unit sales. As automotive infotainment systems start to become commonplace, the luxury car makers will be working on even more sophisticated capabilities for head units. In-vehicle infotainment (IVI) will have to have more bells and whistles for the high-end market while they start saturating the low-end market.

It’s clear that demand for more sophisticated systems, along with expansion from economies of scale, will continue to drive market growth for automotive infotainment systems.

 

Topics: Infotainment/IVI

Michael O'Shea

Michael O’Shea is the Founder and CEO of Abalta Technologies. He is responsible for all aspects of executive management of Abalta and a direct participant in many client engagements, particularly in management advisory projects.

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