Virtual Reality (VR) in Automotive Market Size, Share & Industry Analysis, By Type (Hardware, Software, and Content), By Application (Design, Prototyping and Testing, Training and Simulation, Showroom and Retail Experience, Manufacturing and Assembly, and Others (Logistics)), and Regional Forecast 2024-2032

The global Virtual Reality (VR) in automotive market size was valued at USD 2.36 billion in 2023. The market is projected to grow from USD 3.19 billion in 2024 to USD 37.13 billion by 2032, exhibiting a CAGR of 35.9% during the forecast period.

Virtual Reality (VR) in automotive industry refers to the use of immersive, computer-generated environments to enhance various aspects of vehicle development, design, and customer experiences. One key application of VR is in the design and engineering process, where it allows designers and engineers to create and interact with virtual prototypes, enabling them to visualize and evaluate concepts, ergonomics, and functionality in a highly realistic manner. This aids in streamlining the design process, reduces the need for physical prototypes, and facilitates faster iteration and optimization.

Additionally, virtual reality in automotive is being leveraged to enrich the customer experience, with automakers creating virtual showrooms and test-drive experiences that allow potential buyers to explore and interact with vehicles in an immersive environment, even before the physical 3D models are available. This drives customer engagement, personalizes the buying process, and ultimately leads to increased sales and satisfaction.

Advancements in Virtual Reality (VR) technology drive the growing adoption of VR in automotive industry, the need for more efficient design and development processes, and the increasing demand for personalized and engaging customer experiences, all of which have been further accelerated by the impact of the COVID-19 pandemic.

In February 2024, AutoVRse, a virtual reality startup, secured USD 2 million in funding led by Lumikai. The investment will be allocated toward enhancing its core enterprise offering, VRseBuilder, bolstering its team and expanding its market presence, particularly in the U.S.

IMPACT OF GENERATIVE AI

Generative AI to Enable Personalized Experiences, Streamline Design, and Reduce Prototyping

Generative AI, with its ability to create highly realistic and customizable digital environments, is enhancing automakers' VR experiences. Integrating generative AI-powered features, such as the video wall configurator and the mega visualizer, enables car buyers to experiment with different design elements and customizations dynamically and interactively. This level of personalization and customization, facilitated by the power of generative AI, is crucial in catering to tech-savvy and modern car buyers.

The impact of generative AI on VR in automotive industry extends beyond just the customer experience. Automakers also leverage these advanced AI technologies to enhance the design and development process, allowing engineers and designers to create and iterate on virtual prototypes more efficiently. This reduces the need for physical prototypes and accelerates the overall product development cycle, ultimately leading to faster time-to-market and more agile innovation in the industry.

In February 2024, Infinite Reality (iR) and Vodafone unveiled an automotive onboarding OEM service at Mobile World Congress 2024 in Barcelona. The service showcased Vodafone's Pairpoint technology, which combined generative AI with AR and VR to redefine automotive retail and customer engagement.

Virtual Reality (VR) in Automotive Market Trends

VR to Enable Virtual Prototyping in Automotive Design and Engineering, Reducing Costs and Accelerating Iteration

The automotive industry has embraced VR technology as an influential tool for streamlining design and engineering workflows. Automakers build and test vehicle prototypes digitally by creating fully immersive technology and interactive virtual environments. Design teams collaboratively evaluate concepts, experimenting with different styling elements, interior layouts, and even analyzing ergonomics from a driver's perspective before a single physical prototype is constructed. This approach saves significant time and costs associated with traditional clay modeling and prototype fabrication. It allows for rapid iteration and refinement of designs based on real-time feedback and simulations.

Engineering teams are also harnessing the power of Virtual Reality (VR) in automotive to optimize vehicle performance, safety, and car manufacturing processes. Virtual prototypes undergo rigorous simulated testing, replicating real-world driving conditions, crash scenarios, and assembly line procedures. This digital testing environment has enabled engineers to identify and address potential issues early in the development cycle, leading to more robust and refined products. Moreover, conducting virtual walkthroughs of proposed production lines empowers manufacturers to optimize factory layouts, streamline workflows, and identify potential bottlenecks before committing significant resources to physical implementation. As VR technology advances, the automotive industry is poised to realize even greater efficiencies and innovations through its adoption.

In December 2022, Honda utilized advanced VR technology to develop future vehicles, including the 2023 Honda Pilot TrailSport and 2024 Honda Prologue. VR was a critical tool for designers, enabling virtual prototyping and collaboration among global teams.

Virtual Reality (VR) in Automotive Market Growth Factors

Affordability and Accessibility to Fuel the Automotive Industry's Embrace of Virtual Reality

The growing availability and affordability of VR hardware and software have been a significant driving factor behind the widespread adoption of this technology in the automotive industry. Over the past few years, the consumer market has witnessed a surge in the development and commercialization of high-quality VR headsets and associated hardware from major tech companies. This has led to a substantial decrease in the overall cost of VR setups and fostered intense competition among manufacturers, further driving down prices and making the technology more accessible to a broader range of consumers and businesses alike.

The software ecosystem supporting VR has also experienced remarkable growth in the automotive market, with an influx of powerful game engines, development tools, and specialized applications tailored for various industries, including the automotive sector. These advancements have significantly lowered the barriers to entry for automotive companies seeking to integrate VR into their workflows. From creating immersive virtual showrooms to facilitating collaborative design processes and training simulations, the availability of user-friendly and cost-effective VR software solutions has empowered automotive companies to leverage the full potential of this technology without prohibitive upfront investments or extensive in-house development resources. As a result, even smaller automotive firms and startups can now explore the benefits of VR, fostering innovation and driving the industry's overall adoption of this transformative technology.

In October 2023, DPVR unveiled the E4C headset, targeting VR arcade operators to enhance the affordability and profitability of virtual reality entertainment while providing players with an improved visual experience, featuring a 90Hz refresh rate, 4K fast-LCD display, and others designed for seamless transitions between virtual and real worlds, and suitable for use in automotive VR applications.

RESTRAINING FACTORS

Higher Initial Investment and Rapid Changes in the VR Technology to Impede Widespread Adoption

The substantial capital expenditures required to implement advanced virtual reality solutions within the automotive sector represent a formidable financial obstacle that warrants careful consideration. The initial procurement and integration of sophisticated VR hardware systems and establishing a robust technological infrastructure capable of delivering seamless, high-fidelity immersive experiences necessitate significant upfront investments. This infrastructure often mandates the acquisition of high-performance computing resources, low-latency networking capabilities, and dedicated server architectures, culminating in a considerable financial outlay.

Furthermore, the relentless pace of innovation within the VR domain presents an ongoing financial quandary. The perpetual introduction of new hardware and software iterations produces a cyclical requirement for system upgrades and updates, potentially creating compatibility difficulties that demand additional capital allocations to ensure seamless interoperability across disparate components and platforms. A failure to maintain technological currency renders existing VR deployments obsolete or inadequate, compromising the ability to leverage the latest functionalities and capabilities fully. These factors collectively impede the Virtual Reality (VR) in automotive market growth.

Virtual Reality (VR) in Automotive Market Segmentation Analysis

By Type Analysis

Rising Demand for VR Hardware is Driven by High Costs and Technological Advancements

By type, the market is distributed into hardware, software, and content. The hardware segment holds the highest market share due to the significant upfront costs associated with procuring and setting up the necessary hardware infrastructure, including high-end VR headsets, powerful computing systems, and specialized equipment. Additionally, the need for periodic upgrades and replacements to keep up with technological advancements further contributes to the hardware segment's substantial market share.

• For instance, Volkswagen Group extensively integrated AR and VR technologies into its SAIC plant in Shanghai, which specializes in electric car production, as part of its Industry 4.0 strategy. The plant emphasized technologies for production improvement and automation, including VR and AR glasses for employees. This aimed to enhance training processes and efficiency for its 10,000 employees by deploying virtual reality simulators.

The content segment, encompassing virtual environments, simulations, and interactive experiences, is experiencing the highest growth rate driven by the rising demand for high-quality, engaging, and customized content for applications, such as virtual showrooms, product configurators, and training simulations. The integration of advanced technologies, including generative AI, enabling the creation of highly realistic and dynamic virtual environments, and the industry's focus on sustainability and reducing physical prototyping costs are also contributing to the rapid growth of the content segment.

By Application Analysis

Training and Simulation Segment Led the Market with Immersive Environments and Cost-Effective Delivery

By application, the market is distributed into design, prototyping, and testing, training and simulation, showroom and retail experience, manufacturing and assembly, and others. The training and simulation segment held the highest Virtual Reality (VR) in automotive market share due to the high adoption rate of virtual reality for creating immersive environments for employee training, enabling safe and controlled practice environments, and cost-effective and standardized training delivery across multiple locations. The potential for improved employee performance and reduced training costs further contributed to this segment's dominant market share.

The design, prototyping, and testing segment has the highest growth rate driven by the increasing emphasis on sustainable practices, reducing physical prototyping costs, and advancements in VR hardware, software, and integration with generative AI, enabling more realistic simulations. Additionally, the ability to facilitate global collaboration and streamline product development processes through virtual prototyping is a key factor fueling the growth of this segment.

REGIONAL INSIGHTS

In our research, we have considered the geographical aspects of the market: North America, South America, Europe, the Middle East & Africa, and Asia Pacific. These regions are further categorized into several dominating countries.

North America holds the highest virtual reality in automotive market share due to the presence of major automotive manufacturers and technology companies that have invested heavily in adopting VR solutions for designing, prototyping, training, and customer experiences. The region's early recognition of VR benefits, such as cost savings, accelerated product development cycles, and enhanced customer engagement, has led to widespread adoption across automotive applications. North America's advanced technological infrastructure, skilled workforce, and government funding and initiatives supporting emerging technologies, such as VR, facilitated the integration into automotive workflows. Investments in VR research and development promoted innovation, while the affluent consumer base drove the growth of VR applications in automotive retail experiences, further boosting the market share for virtual reality in automotive.

Asia Pacific, home to major automotive manufacturing hubs and emerging economies, such as China and India, with rapidly growing populations and consumer markets, is experiencing the highest growth rate in the virtual reality in automotive market, driven by rising tech-savvy consumers demanding innovative technologies. Government initiatives and policies in countries, such as Japan to promote advanced automotive technologies, along with investments by international and domestic automakers in R&D centers focused on integrating VR solutions, have accelerated growth. The large skilled workforce and lower labor costs have made the region attractive for automotive companies to outsource VR development and implementation. The emphasis on sustainable practices and reducing environmental impact has prompted automakers to adopt VR to minimize physical prototyping waste, further fueling the high growth rate in the market.

Europe emerged as a significant player in the VR in automotive market for its renowned automotive industry. Major European automakers, such as Volkswagen, BMW, and Mercedes-Benz, have been at the forefront of adopting VR technologies for several applications, including design, prototyping, and customer experiences. The region's focus on innovation and sustainability has driven the integration of VR solutions to streamline product development processes and reduce physical prototyping costs. Additionally, the presence of a robust technology ecosystem, coupled with government initiatives supporting research and development in emerging technologies, has fostered a conducive environment for the growth of VR in the European automotive sector.

The Middle East & Africa, and South America are gradually recognizing the potential benefits of VR in areas, such as vehicle design, prototyping, and customer experiences. Several automotive companies in these regions are starting to invest in VR solutions to enhance their product development processes and provide immersive experiences to customers. Additionally, government initiatives aimed at promoting technological advancements and attracting foreign investments in emerging technologies, such as VR, are expected to drive the VR in automotive sector across these regions.

List of Key Companies in Virtual Reality (VR) in Automotive Market

Key Players are Expanding Resources Toward VR Environments to Enhance Their Applications

Key players in the market are leveraging strategic partnerships, collaborations, and other similar strategies to enhance their VR offerings. These partnerships enable them to access new technologies, expand their market reach, and offer more comprehensive solutions to their customers. By collaborating with VR content developers, software providers, and other industry players, these companies create more immersive and engaging customer experiences. Additionally, strategic partnerships enable them to stay at the forefront of technological advancements and drive innovation in the automotive industry. Their strategies also involve using VR to enhance team communication and collaboration, reduce the need for physical prototypes, and accelerate product development cycles. These key players aim to make a mark in the automotive industry by integrating VR into design and development processes.

In January 2023, Maruti Suzuki launched ArenaVerse, a Metaverse platform for its Arena showroom network, allowing users to experience its vehicles in an interactive virtual environment. This platform provided a more engaging retail experience, enabling customers to configure cars and digitally interact with sales representatives.

List of Key Companies Profiled:

• Vection Technologies Ltd. (Australia)


• Wear Studio (Ukraine)


• Unity Technologies (U.S.)


• XR Labs (India)


• Bosch GmbH (Germany)


• Meta Platforms, Inc. (U.S.)


• Tecknotrove (India)


• Volkswagen AG (Germany)


• BMW M GmbH (Germany)


• WayRay AG (Switzerland)

KEY INDUSTRY DEVELOPMENTS:

• March 2024: Honda unveiled its Honda XR Mobility Experience, combining its UNI-ONE powered wheelchair with VR goggles. This innovative experience enabled users to navigate virtual worlds while experiencing real movement, showcasing the potential usages of the wheelchair for virtual and extended reality entertainment.


• January 2024: BMW partnered with Xreal to unveil its latest tech innovations at CES 2024, which included mixed reality driving car glasses and 'teleparking' features. BMW's 'Air 2' glasses offered an AR experience by overlaying real-time, head-up display data and integrating speakers for voice guidance, making driving both safer and more interactive.


• January 2024: Qualcomm showcased its Snapdragon XR2+ Gen 2 chip for mixed and virtual reality headsets at CES 2024. The chip enhanced mixed and virtual reality meetings and featured on-device AI capabilities for immersive digital environments and improved communications, aligning with Qualcomm's commitment to autonomous car tech.


• October 2023: IDTechEx explored advanced virtual reality vehicle technologies, highlighting the future of driving with autonomous and electric vehicles. Features, such as emission-free driving, charging at home, and the smooth experience of electric vehicles, were also included.


• September 2023: holoride partnered with maxdome to deploy VR video streaming to vehicles by launching the 'holoride cinema' app. This app enabled commuters to use the company’s motion-synchronized in-car entertainment platform to stream all types of VR content from maxdome.

REPORT COVERAGE

The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product/service types, and leading applications of the product. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

Report Scope & Segmentation