Global automotive software market to grow at CAGR of 16.9% by 2025


The global Automotive Software Market size is projected to grow from USD 16.9 billion in 2020 to USD 37.0 billion by 2025, at a CAGR of 16.9% says the report of MarketsandMarkets™.

The market is driven by factors such as the rising demand for fuel-efficient vehicles, growing safety concerns, and the high adoption rate of advanced electrical and electronic components in vehicles. In addition, increasing focus on driving comfort and in-cabin experience coupled with high-end infotainment would fuel the demand for automotive software during the forecast period.

The ADAS & safety system segment is expected to be the largest application of the automotive software market

The ADAS & safety systems are meant to benefit consumers and protect them from potential hazards. It contributes toward improving the overall safety of the driver as well as passengers. It includes the application of communication technology in ADAS features such as adaptive cruise control, blind-spot detection, lane departure warning, automatic emergency braking, and park assist. It also includes basic safety systems such as adaptive cruise control (ACC), anti-lock braking system (ABS), tire pressure monitoring system (TPMS), vehicular communication system, and electronic stability control. The industry is focusing on producing advanced software platforms for ADAS systems with a higher level of abstraction, which allows flexible integration of algorithms and sensors. Moreover, priority is on creating software with algorithms that can more accurately predict the various possibilities without any slowdown or data overload.

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The adoption of the ADAS & safety system has increased due to increasing demand for safety & security concerns along with the government mandates. For instance,  the regulatory bodies of the US and EU are mandating forward-collision warning systems and autonomous emergency braking systems in all vehicles by 2020. This is supporting the growth of automotive software for the application.

The application software segment is expected to be the fastest-growing among software layers in the automotive software market

Application software supports the architecture and customized functionalities of the vehicle. It consists of several applications and software layers, which allow the execution of tasks as per the application.   Application software consists of three layers—ports of the software layer, port interfaces application, and software layer. Automotive software supports the following applications: ADAS and safety, body control and safety, powertrain management, infotainment, communication, vehicle management, and autonomous driving. With the changing demands of passengers and OEMs, new and advanced applications are expected to penetrate the market, which will drive the market for application software.

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There has been an increasing inclination of users toward high-tech software applications. OEMs are offering advanced applications such as HMI, keyless entry, and auto-park assist, which create the demand for advanced software to be used in new automotive systems. This, in turn, is expected to drive the growth of the application software market.

Asia Pacific is expected to be the largest Automotive Software Market by 2025

One of the key drivers for the Asia Pacific market is the increased demand for connected services, particularly in China, Japan, and South Korea. The tech-savvy population in these countries demands a better and connected driving experience. Moreover, it is the largest market since it has the majority of vehicle production, which is further exported to other regions.  Although, Asia Pacific has lower penetration of automotive software than North America and Europe currently; however, market size is larger due to more massive vehicle production.

The software market in the region has shown a significant dip in 2020 because of COVID-19, as it interrupted the test and development of new software technologies in the market. Asia-Pacific is the most hit region as China is the largest producer of the automobile, and all the production process has stopped because of the pandemic. It is expected that the market will have a short-term effect because of the pandemic and register a high again in 2021 because of the inclination of the passenger to use high-end technology and connectivity solution in their vehicle.

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The Automotive Software Market is dominated by global players such as Robert Bosch (Germany), NXP Semiconductors (Netherland), Renesas Electronics (Japan), BlackBerry Limited (Canada), and NVIDIA (US). These companies have adopted strategies of new product development, expansion, collaborations, partnerships, and mergers & acquisitions to gain traction in the automotive software industry.

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