According to the Market Statsville Group (MSG), the global automotive software market size is expected to grow from USD 10,797.00 million in 2022 to USD 44,757.73 million by 2033, growing at a CAGR of 13.8% from 2023 to 2033. Technological advances in automotive software systems as well as increased sales tracking, improved inventory management, better customer relationship management, and greater ease of calculations of commissions and insurances, such factors fuel the growth of the automotive software market over the forecast period. The private sector represented a larger part of the automotive software market in upcoming years. This is mainly due to an increase in the number of private companies that provide these systems to the automotive industry. In addition, the public offer of this system is a small number compared to private companies that operate in the industry. The automotive software market has undergone many technological advances in recent years through the introduction of modern methods in various functional areas such as supply chain logistics, retail and rental trade, connected vehicles, and mobility solutions. The market had also influenced due to the changes mainly based on inventory management and previous and subsequent improvements of the analysis. In addition, with a greater investment in CRM, market participants can maintain customer relations and attract new customers. Automotive software is generally expensive and somewhat complicated in terms of flexibility in terms of personalization.
As technology advances, the latest automotive software used in the industry is optimized for mobile and web platforms. It is also supported by real-time analysis and smart features. Demand for cloud-based automotive software has increased in transport and logistics, and it is expected that this trend will continue during the forecast period. In addition to transport and logistics, the maritime and sports sectors offer important growth opportunities in the market for these systems.
Automotive software can help dealers or distributors to increase sales and margins, make smarter and faster inventory decisions and reduce returns, and others. This software automates and streamlines some of the redundant tasks that vehicle dealers face in their daily back-end office to front-end business. The task could be tracking the financial accounts related to invoicing and ledger, managing inventory of used and unused vehicles, generating customized reports related to accident history and credit reports and to optimize the cost of vehicle repairs.
Automotive software provides a centralized application to capture customer, vehicle, and inventory information. The software covers pre-sales, vehicle sales, parts and spares, service, CRM, basic financial accounting, and workflow automation with alerts. Manufacturers using the system access a simplified methodology to onboard and certify dealerships, better visibility into dealer operations, improved inventory management, customer conversions, and customer retention along with a remote help desk.
The COVID-19 pandemic situation compelled many countries to impose lockdown in 2020, which ravaged businesses in these countries and lead to the discontinuation of auto dealership operations. Automotive software help auto dealers to stay updated regarding the current market trends and changes. Thus, slump in the businesses of dealers also slightly hindered the growth of the automotive software market in 2020.
However, as stated by Forbes, despite these conditions, dealerships in certain US states continued their operations, with formal permission from the US government to run the business during the pandemic as it is one of the crucial businesses, especially for the transport industry. As per the National Automobile Dealers Association (NADA), the US government allowed the auto dealership business in pandemic. Since auto dealers were back in business, the demand for the system upsurges in the region. The market players manage to offer their solutions remotely even in the pandemic.
The rise of electric mobility will have far-reaching implications for car dealers, affecting practically every facet of the industry. There's a lot to think about, from profit pool allocation to the implementation of new operational procedures. Maintenance employees will require training to safely and quickly maintain high-voltage powertrain systems, while frontline sales staff will be expected to professionally address customer queries and clinch the sale. Electric vehicles (EVs) also have fewer mechanical parts that fail, which has a big impact on aftermarket servicing. Such factors create huge demand for the automotive software to manage the operations regularly and update dealers regarding further requirements and support in long-term decision making for the business growth. This, in turn, propels the market's growth over the forecasting period.
In addition, the evolving and emerging electric vehicles market coupled with government initiatives to promote its growth will accelerate the market's growth. For instance, the United States government spent $5 billion in 2017 to encourage electric car infrastructure such as charging stations. Several governments are offering different incentives to adopt EVs, such as reduced or no registration costs and exemptions from import taxes, sales taxes, and road charges.
Automotive software is quite difficult in terms of modification flexibility, and it is often expensive. Modern automobile dealer management systems utilised in the business are being optimised with online and mobile platforms as technology advances. Automotive software is also backed by real-time analytics and smart features, which tend to make these systems pricey, which, in turn, limits their acceptance and slows market development.
Further, despite major developments in automotive software technology, cybersecurity remains a major restraining factor for the market. Automotive software is vulnerable to cyberattacks. There are various instances where cybersecurity has created a nuisance. According to a study, data breaches have increased by 67% in recent years, with the US being the number one target for cyberattacks. Cyber-attack may disrupt the operations of the users, which lead to revenue loss. Such factors will negatively affect the market’s growth over the forecast period.
The automotive industry has experienced numerous technological advancements. The impact of modern technologies has shaped the industry over the course. The advancements in digital technologies have made it possible for automobiles to implement advanced solutions. The automotive software is an optimal solution for automobile companies involved in spare parts inventory and work order management tasks. The system incorporates customer relationship management (CRM) and business intelligence tools to track manufacturer and customer relationships. Several car dealers are highly using automotive software to manage their inventory and sales.
These systems also enable auto dealers to streamline interactions between customers, dealers, and OEMs. Moreover, they support the unique needs of the retail automotive industry. The automotive software drives the sales of new and used vehicles, repair and maintenance services, consumer financing, and vehicle and parts inventory management. Besides, they allow financial reporting, cash flow management, and payroll services. The system incorporates OEM data processing systems and allows automotive retailers to order vehicles and parts, process warranties, and receive vehicle records. Thus, the heavy adoption of innovative dealer management systems in the automotive industry is propelling market growth.
The study categorizes the automotive software market based on type, vehicle type, ev application, and application area at the regional and global levels.
Based on the vehicle type, the market is divided into passenger cars, LCV and HCV. The passenger cars segment is expected to dominate the market share in 2022 in the global automotive software market. The passenger cars segment currently dominates the market share in the automotive software market during the forecast period as software services have a higher penetration in passenger cars than commercial vehicles. The increased need for highly advanced applications such as ADAS and linked services is driving the demand for automotive software in passenger automobiles in industrialized nations. The increase in demand for advanced applications for the automotive industry prompted the main player to implement the plan. The increased disposable income in Asia Pacific emerging countries has spurred demand for passenger automobiles with technologically enhanced services.
China is quickly becoming one of the most important worldwide export centers for US electric vehicle manufacturers. Furthermore, the region's need for automotive software is expected to rise owing to the introduction of autonomous driving and a significant increase in demand for high-end services.
Based on the regions, the global automotive software market has been segmented across Europe, North America, the Middle East & Africa, Asia-Pacific, and South America. Asia Pacific is projected to account for the highest market share of 40.5% in 2022. Increased demand for connected services, particularly in Japan, China, and South Korea, is driving the Asia Pacific automotive software industry. It is the largest market since it produces the bulk of vehicles. Even though automotive software penetration in the area is quite low when compared to North America and Europe, the market size is bigger due to higher vehicle production.
This region's key automotive manufacturers, as well as software suppliers and system integrators, are concentrating on creating and inventing innovative software solutions to support dependable, safe, and performance-oriented automotive applications. Over the years, the country has dramatically increased the number of releases of autonomous car models, as well as the development of vehicle autonomous systems among automotive industry participants. Furthermore, it is predicted to maintain its current growth rate during the projection period.
The automotive software market is a significant competitor, and extremely cutthroat in the sector are using strategies including product launches, partnerships, acquisitions, agreements, and growth to enhance their market positions. Most sector businesses focus on increasing their operations worldwide and cultivating long-lasting partnerships.
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