$31.5bn
The predicted size of the
global connected vehicle
market in US dollars by
2023 (up from $18.7bn
in 2018)
(Statista)
|MARKET REPORT
If you want to see what
innovation will look like in Europe in
five to 10 years, it’s better to go to
Shanghai than Silicon Valley
Dr Rainer Mehl, managing director of manufacturing,
automotive and life sciences, Capgemini Invent
Annual Showcase 2020 | Intertraffic World 021
Arecent report about the future of
connected vehicles from Capgemini
has urged western vehicle OEMs to
change their approach to China. The
Connected Vehicle Trend Radar says China should
no longer be seen as simply another market, but
also as the most dynamic source of innovative
ideas and technologies. In practice, this means
establishing a stronger presence in China,
which will become the biggest market for
connected vehicles from 2023 onwards.
“I’ve been covering China for 10 years and
the market has accelerated astonishingly
quickly since 2009,” says Dr Rainer Mehl,
managing director of manufacturing,
automotive and life sciences at Capgemini
Invent. “China has the world’s biggest car
market with 28 million sales a year, but it’s also
got the most mobile customers with the highest
technological affinity. If you want to see what
innovation will look like in Europe in five to
10 years, it’s better to
go to Shanghai than Silicon Valley.”
The Trend Radar says there were
119.4 million connected vehicles
(CVs) in the world in 2018, when the
global market was worth US$18.7
billion. But it is growing fast with a
compound annual
growth rate (CAGR) of
11% for revenue and
24.2% for quantity. In
2023, sales of 352.9
million connected cars
worldwide will be
worth US$31.5 billion,
according to Statista’s
Connected Car Outlook.
The emergence of
China as the dominant
market will be gradual. In 2018, the highest
number of sales was 31.1% in the US, but China
will soon be exhibiting the fastest growth,
predicts Statista. Chinese market share of global
revenue generated by connected cars is going to
shift by around six percentage points from 17.6
% to 23.5% between 2018 and 2023. As China
gets richer, more and more people will own
cars ‘reflecting tremendous growth potential’.
Meanwhile, in Europe, the quantity of CVs
sold will grow in line with the global market –
24.3% versus 24.2% globally, but in the US it
will slow to 19.6% by 2023.
The report’s authors recommend investing
in China now because “leadership in this
market will mean global leadership”. They
advise making China the ‘epicentre’ of the
connected services revolution. In practice, such
a strategy means concentrating research and
development in China and learning about
customer preferences. “It requires a different
viewpoint. Rather than seeing it as just a place
to sell cars, companies need to reflect on what
lessons they can learn from China that can be
transferred to other markets,” says Dr Mehl.
Open to change
Behind Capgemini’s enthusiasm for China lies
the awareness that the market is more willing
to embrace connected cars than elsewhere. The
Trend Radar quotes Kantar’s 2018 research
showing 79% of Chinese respondents plan to
buy one, compared to 53% in Europe and 52%
in the US. The same research reveals that even
more Chinese customers are “keen to
embrace autonomous driving”, with
75% saying they will accept it,
compared with 24% in the US and
36% in Europe. China has a very high
proportion of young people,
especially millennials, open to new
technology. The
authors say these
digital natives will
make up a large
share of the market
for CVs.
The rapid growth
of the market in
China means OEMs
should consider the
wishes of Chinese
consumers ahead of
all others. They need to use the market as a test
and launch environment for digital apps. There
are also lessons to take back from China’s
inventiveness.
“There are many examples of advanced
functionality in China,” says Dr Mehl. “WeChat
allows instant payments and everyone uses
mobile payment apps rather than cards. Ride
hailer Didi Chuxin offers a service where you
can book a driver to take you home in your
own car within five minutes. Such services are
almost unknown in the west. My connected
BMW app also has much richer content in