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According to a new research report from the IoT analyst firm Berg Insight, the number of telematics service subscribers using embedded systems will grow at a compound annual growth rate (CAGR) of 13.0 percent from 286.6 million subscribers at the end of 2024 to 528.1 million subscribers at the end of 2029. Moreover, Berg Insight forecasts that shipments of embedded car OEM telematics systems worldwide will grow from 64.5 million units in 2024 to reach 82.1 million units in 2029, which represents an attach rate of 93 percent. The attach rate of embedded car OEM telematics systems in 2024 was about 79 percent globally. New passenger car and light truck registrations increased 3.5 percent to 82.1 million worldwide in 2024. The market grew for the fourth consecutive year and reached pre-pandemic levels. Berg Insight still anticipates high growth of OEM telematics subscribers in the next years as connected car services become ubiquitous in all major car markets.
Today, most OEM telematics services focus on a set of core propositions including safety, convenience and entertainment services that are made available as standard or premium subscriptions. Carmakers are still experimenting with business models for connected services to better match customer demands and to leverage connected car data for internal purposes. “Carmakers are increasingly bundling core services for free for extended periods to boost brand loyalty and ensure a large portion of cars have active connections. This strategy enables the collection of big data to enhance product development processes and to make sure that the car performs well over its whole lifetime.” said Martin Cederqvist, Senior Analyst at Berg Insight.
Carmakers are moreover increasingly focusing on incorporating third-party apps into infotainment systems, providing access to the same apps that drivers have in their smartphones. Smartphone-mirroring solutions such as Android Auto and Apple Carplay have been a way to incorporate third-party apps, but carmakers are more and more focused on providing access to the apps directly through the car infotainment system, without the need for smartphone connectivity. Some carmakers are even considering removing support for Android Auto and Apple Carplay and other smartphone mirroring solutions in order to take charge of the connected driving experience themselves.
In recent years, AI-powered personal in-car assistants have become increasingly common. Such systems were initially adopted by premium carmakers but are now common across a broad range of brands. “The significant advancements in generative AI is expected to have a transformative effect on the performance and perceived quality of AI-powered in-car personal assistants”, said Mr. Cederqvist. Such systems enable improved natural language understanding which enables more fluid conversations that also reduce driver’s frustration with rigid, predefined command structures. Generative AI-powered in-car personal assistants also enable more personal experiences as they can adapt to drivers’ preferences, habits and immediate needs by maintaining context over extended interactions.
Toyota Motor Group had close to 29 million connected cars at the end of 2024. GM and BMW had more than 20.0 million connected cars at the same time. Ford and Volkswagen make up the remaining top five carmakers in terms of embedded OEM telematics subscribers. Additional automotive OEMs with more than 10.0 million active connected cars at the end of 2024 include Stellantis, Mercedes-Benz, Hyundai and Audi. “Many volume car brands now offer connected services for free in their main markets and these players are expected to constitute a large part of the growth of connected car connections in the coming years”, concluded Mr Cederqvist.
