Automotive Software Market Size, Share & Industry Trends Analysis, By Type (Application Software, Middleware, and Operating System), By Application (ADAS & Safety, Infotainment & Instrument Cluster, Engine Management & Powertrain, and Others), By Vehicle Type (Passenger Cars and Commercial Vehicles), and Regional Forecast, 2024-2032

The global automotive software market size was valued at USD 27.99 billion in 2023 and is projected to grow from USD 31.71 billion in 2024 to USD 91.86 billion by 2032, exhibiting a CAGR of 14.2% during the forecast period. The North America region dominated the global market with a market share of 34.26% in 2023. The market growth is driven by factors such as, advancements in AI and IoT, increasing demand for autonomous driving and connected vehicles, and emerging EV technologies around the globe.

Automotive software encompasses a wide range of software solutions used in the design, manufacturing, operation, and maintenance of vehicles. These solutions are specifically designed for automotive applications, including embedded systems, vehicle management systems, infotainment, safety and security systems, telematics, autonomous driving, and others. These solutions can be used by automakers, suppliers, and service providers to enhance vehicle performance, safety, user experience, and overall efficiency. This market is driven by the increasing integration of software in automotive systems, advancements in technology, and the growing demand for connected, autonomous, and electric vehicles. Furthermore, there is an increasing demand for vehicles equipped with connectivity features, enabling real-time communication and data exchange between vehicles, infrastructure, and cloud services. These factors are expected to drive the automotive software market growth during the forecast period. The market growth is driven by increased demand for process automation, quality control, Software Defined Vehicles (SDVs), and technological advancements in vehicles.

The COVID-19 pandemic had a negative impact on various industries worldwide. As the pandemic caused significant disruptions in global supply chains, affecting the availability of hardware components necessary for automotive software systems. These disruptions led to delays in production and development cycles. However, the pandemic accelerated the automotive industry’s shift toward digitization, focusing on enhancing online sales, remote diagnostics, and Over-the-Air (OTA) software updates.

In the scope of work, we have included solutions offered by companies, such as BlackBerry Limited, KPIT Technologies Ltd, MONTAVISTA SOFTWARE, LLC., Microsoft, Intellias, HARMAN International, and others.

Impact of Generative AI on Automotive Software Market

Growing Demand for Process Automation and Quality Control is Expected to Boost Market Growth

Generative AI technology focuses on generating new content and solutions based on learned patterns and data. This software has a profound impact on various industries, including the automotive sector. Generative AI can rapidly create and evaluate multiple design options for vehicle components, leading to faster iteration and refinement processes. AI algorithms can optimize designs for aerodynamics, weight reduction, and material usage, improving overall vehicle efficiency and performance. Generative AI can also design optimized manufacturing processes, identifying the most efficient ways to assemble components and reduce waste. AI-powered vision systems can detect defects and anomalies in real-time, ensuring higher quality standards in production. Moreover, generative AI can improve the accuracy and robustness of Advanced Driver Assistance Systems (ADAS), making features such as lane-keeping assist and adaptive cruise control more reliable.

For instance,

• In May 2024, KPIT Technologies engaged into partnerships with multiple U.S. car manufacturers. Through this partnership, the company aimed to launch its proprietary generative AI technology embedded into cars.

These advancements are expected to fuel growth in the automotive sector during the forecast period.

Automotive Software Market Trends

Rise in Shift to Software Defined Vehicles (SDV) Aids Market Growth

Vehicles are increasingly defined by their software capabilities rather than just their hardware. This shift enables continuous updates and enhancements through Over-the-Air (OTA) software updates. Automakers are adopting modular software architectures that facilitate easier updates and integration of new features. As vehicles become more connected, ensuring robust cybersecurity measures to protect against hacking and data breaches is critical. In addition, market players are increasingly focusing on integrating sustainability and eco-friendly solutions into autonomous vehicles. This includes development of software that optimizes vehicle performance to reduce emissions and improve fuel efficiency. Features such as eco-driving modes help drivers reduce their environmental impact. As the industry continues to innovate, software will play an increasingly critical role in defining vehicle capabilities and enhancing the overall driving experience. These advancements are expected to fuel market growth during the forecast period.

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Automotive Software Market Driving Factors

Growing Technological Advancements in Vehicles Fuels Market Growth

The integration of Artificial Intelligence (AI) and Machine Learning (ML) into automotive software is enabling advanced functionalities such as autonomous driving, predictive maintenance, and personalized user experiences. The development of sophisticated ADAS features, including lane-keeping assist, adaptive cruise control, and automatic emergency braking, relies heavily on advanced software. Additionally, the proliferation of IoT devices in vehicles allows for real-time data exchange and connectivity, enhancing functionalities such as real-time navigation, vehicle diagnostics, and remote control features. Moreover, the growing demand for telematics systems for fleet management, usage-based insurance, and vehicle tracking is driving the need for robust automotive software solutions. These factors are set to shape the future of the market, leading to continuous growth and development.

 For instance,

• According to an industry survey report, it is projected that 12% of vehicles on the road globally in 2030 will be fully autonomous.

RESTRAINING FACTORS

Data Privacy and Safety Concerns May Hinder Market Growth

Automotive software often operates in safety-critical environments where failures can have severe consequences. Ensuring high reliability and fail-safe operation is paramount, necessitating rigorous testing and validation. Even minor safety bugs can lead to significant safety issues or recalls, impacting consumer trust and increasing costs for automakers.

Moreover, this software often collects and processes large amounts of personal data, which raises concerns about data privacy and protection. Ensuring compliance with data privacy laws such as the General Data Protection Regulation (GDPR) and the Central Consumer Protection Authority (CCPA) is crucial. Maintaining consumer trust by securely managing and transparently disclosing data usage presents ongoing challenges in this sector. These factors are expected to hinder market growth.

Automotive Software Market Segmentation

By Type Analysis

Application software Segment Led due to Growing Demand for Autonomous Driving Capabilities

Based on type, the market is classified into application software, middleware, and operating system.

Application software captured maximum share of the market in 2023, as application software is integral to the development and operation of autonomous driving systems, enabling vehicles to navigate and make decisions without human intervention. By combining data from multiple sensors (LIDAR, cameras, and RADAR) through software applications enhances the accuracy and reliability of autonomous systems.

The operating system is expected to grow at the highest CAGR during the forecast period, as automotive OS efficiently allocates system resources (CPU, memory, and I/O) to various applications, ensuring optimal performance. Operating systems manage tasks scheduling, prioritizing critical functions such as safety and real-time processing over non critical tasks. These factors are anticipated to propel market growth during the coming years.

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By Application Analysis

ADAS & safety Segment Dominated the Market due to Increasing Focus on Enhanced Safety

Based on application, the market is divided into ADAS & safety, infotainment & instrument cluster, engine management & powertrain, and others (telematics and connectivity).

ADAS & safety captured the highest market share in 2023, as automotive software powers essential ADAS features such as lane-keeping assist, adaptive cruise control, automatic emergency braking, and blind-spot detection, significantly enhancing vehicle safety. Moreover, this software enables real-time data processing and decision-making to prevent collisions, protecting both passengers and pedestrians. As technology continues to evolve, the importance and impact of application software in the automotive industry are expected to grow, driving further innovation and improvements in vehicle performance and user satisfaction.

Infotainment & instrument cluster is anticipated to grow at the highest CAGR during the forecast period as it has become an important feature in automobiles. With technological advancement, analog gauges and dials were replaced with digital instrument clusters. It offers important vehicle information such as speed, engine status, and fuel levels. Additionally, modern infotainment systems integrate with smartphones, provide voice-controlled functionality, and offer a wide range of services to enhance the driving experience.

By Vehicle Type Analysis

Passenger cars Segment Led owing to Rising Integration of IoT and V2X Technology  

Based on vehicle type, the market is bifurcated into passenger cars and commercial vehicles.

Passenger cars captured the highest market share in 2023. The integration of IoT devices and V2X (Vehicle-to-Everything) communication technologies enables cars to connect with each other, traffic infrastructure, and the cloud. This connectivity facilitates real-time data exchange and improves traffic management. Furthermore, many passenger cars are now equipped with semi-autonomous features, such as autopilot and self-parking. These capabilities leverage advanced software algorithms to enhance convenience and safety for drivers.

Commercial vehicles are expected to grow at the highest CAGR in the coming years, as features such as real-time vehicle diagnostics, remote monitoring, and usage-based insurance are becoming more common due to advancements in telematics software. Automotive software plays a crucial role in enabling commercial vehicle operators to track and ensure compliance with safety, emissions, and driver hours regulations, which are important in many regions worldwide.

REGIONAL INSIGHTS

Geographically, the market is studied across North America, South America, Europe, the Middle East & Africa, and Asia Pacific.

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North America held the largest automotive software market share in 2023. The region, particularly the U.S. and Canada, is experiencing significant growth in the adoption of electric vehicles, driven by companies such as Tesla and regulatory incentives. Advanced software for managing battery performance, energy efficiency, and charging infrastructure is critical for the growing EV market. Major automakers and tech companies in North America, such as Waymo, General Motors, and Tesla, are heavily investing in the development of autonomous driving technologies.

For instance,

• The National Highway Traffic Safety Administration (NHTSA) and other regulatory bodies are encouraging or mandating the inclusion of certain ADAS features to improve road safety.

Asia Pacific is expected to grow at the highest CAGR during the forecast period. The region has  experienced significant growth in the automotive market, with China, Japan, South Korea are leaders in the EV market, with significant investment in electric vehicle technologies and infrastructure. Advanced battery management systems are crucial for optimizing battery performance and ensuring the safety and efficiency of EVs. Moreover, there is a high demand for advanced infotainment systems in the region, offering seamless integration with smartphones, internet connectivity, and sophisticated user interfaces. Connected vehicles provide real-time navigation, traffic information, and remote diagnostics, enhancing the overall driving experience. For instance,

• In April 2024, Huawei, a Chinese technology provider company, launched a novel automotive software for intelligent driving. Through this software launch, the company aimed to expand its business in the electric vehicle industry.

Europe is anticipated to grow at a noteworthy CAGR in the coming years. ADAS features such as, adaptive cruise control, lane-keeping assist, automatic emergency braking, and parking assistance are widely adopted in European vehicles. The European Union (EU) has stringent safety regulations, such as the General Safety Regulations (GSR), mandating the inclusion of certain ADAS features in new vehicles to enhance road safety. Moreover, European vehicles are integrating advanced Human-Machine Interfaces (HMIs), including touchscreens, voice controls, and augmented reality displays, to enhance user experience.

The Middle East & Africa is expected to showcase prominent growth during the forecast period. Many automakers in the region are adopting over-the-air update capabilities allowing remotely software updates, features addition, and address security vulnerabilities without requiring physical visits.

In South America the market is increasing steadily as automakers are increasingly investing in autonomous driving technologies. Numerous pilot programs and testing initiatives are underway, particularly in Brazil and Argentina paving the way for broader adoption of autonomous vehicles.

Automotive Software Market Key Companies & Competitve Landscape

Leading Organizations are Joining Forces to Increase their Global Footprint

Leading companies are concentrated on solidifying their market position by showcasing industry-specific services. These companies are deploying acquisitions and merger strategies with domestic players to cement their position. Established firms are unveiling cutting-edge solutions to increase their customer pool. Additionally, rising capital expenditure in research and development to launch technologically advanced products is anticipated to develop market expansion. Furthermore, prominent companies are deploying strategies to maintain an edge over other companies in the competitive market.

List of Top Automotive Software Companies:

• BlackBerry Limited (Canada)


• KPIT Technologies Ltd (India)


• Google LLC (U.S.)


• Airbiquity Inc (U.S.)


• Wind River Systems, Inc. (U.S.)


• Microsoft (U.S.)


• MONTAVISTA SOFTWARE, LLC. (U.S.)


• Robert Bosch GmbH (Germany)


• Intellias (U.S.)


• HARMAN International (U.S.)

LATEST INDUSTRY DEVELOPMENTS :

• April 2024: Tata Motors selected the HARMAN Ignite Store, as its in-vehicle app store, helping customers to access apps easily and securely across worldwide.


• March 2024: Valeo partnered with SDVerse Vehicle Software Marketplace, General Motors, Magna, and Wipro to develop a B2B sales platform for selling and buying automotive software.


• March 2024:  Arm revealed its state-of-the-art Arm Automotive Enhanced (AE) processors along with novel virtual platforms to boost automotive development cycles by up to two years.


• January 2024: Hyundai Mobis selected Wind River to propel its software-defined vehicle development, aiming to strengthen its automotive software business using Wind River Linux and VxWorks real-time operating system.


• October 2023: Hozon New Energy Automobile Co., Ltd. engaged into partnership with Wind River to build the Hozon Automotive Intelligent Security Vehicle Platform, offering new possibilities for consumers and car makers.

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.

An Infographic Representation of Automotive Software Market

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