The number of telematics service subscribers using embedded systems will grow at a compound annual growth rate (CAGR) of 19 percent from 132.8 million subscribers in 2020 to 376.8 million subscribers in 2026.
Shipments of embedded car OEM telematics systems will grow from 41.1 million units in 2020 to 76.9 million units in 2026, which represents an attach rate of 90.8 percent.
New passenger car and light truck registrations declined 14.5 percent to 66.8 million worldwide in 2020. The Covid-19 crisis had a significant impact on new car sales in 2020 which dropped significantly and the semiconductor shortage this year has further impacted automotive sales.
Carmakers are still experimenting with business models for connected car services as renewal rates for telematics subscriptions after the initial free period still remain relatively low. Competition and local regulations will likely lead to that a growing number of brands will offer free basic services such as safety and diagnostics for the lifetime of the vehicle.
Carmakers are expected to offer connected car services through a modular sales approach where customers can order services individually and thus generate revenues on value-added services built on top of basic telematics services.
Carmakers have also begun selling premium features and enhancing car performance via OTA updates. BMW for example offers a range of vehicle functions in the form of digital after-sales services in the ConnectedDrive store.
Other carmakers offering similar services include Tesla, Mercedes-Benz, Audi and Porsche. Examples of vehicle functions sold as upgradable premium features include for example Active Lane Keeping, Dynamic Light System, Power Steering, ADAS features and Intelligent Range Management.
Connected car services have evolved from being a differentiating factor to a common feature with a high attach rate in Europe, North America and Asia-Pacific.
General Motors had more than 22.0 million connected cars at the end of 2020 and BMW had about 14.5 million connected cars. Toyota Motor Group, Mercedes-Benz and Volkswagen make up the rest of the top five carmakers in terms of embedded OEM telematics subscribers.
The top five carmakers account for about half of the world’s embedded telematics subscribers. Additional automotive OEMs with more than 5.0 million active connected cars at the end of 2020 include Hyundai, Stellantis, Ford and Audi.