Connected cars witness widespread adoption; likely to account for more than half of PV market in 2023

With prospective buyers increasingly demanding tech-loaded features that allow convenience and safety on the road, cars priced at Rs 6 lakh and above are now quintessentially "connected". As per the data shared by JATO Dynamics, the penetration of connected cars in the Indian passenger vehicle (PV) market was 35 percent in the calendar year 2021, which went up to 46 percent in 2022 and is now projected to shoot up further to 63 percent this year.

In layman’s terms, a "connected car" refers to any PV that has embedded software that enables the user to communicate with external gadgets, such as smartphones or smart devices (at home), or other vehicles via wireless communication technologies, such as Bluetooth, Wi-Fi, etc.

Such 'Gizmos-on-wheels’ or The Internet of Things (IoT)-enabled vehicle models hogged the limelight at the latest edition of Auto Expo too. Industry players reckon that there is a rising proportion of buyers who have high disposable incomes as well as exposure to technology, as a result of which connected vehicles are witnessing widespread adoption.

For instance, Ricky Mahendru (38), a Noida-based businessman, was looking for a tech-enabled vehicle wherein he could remotely operate certain functions from his smartphone. After exploring multiple options, he opted for a model sold by a Japanese carmaker, which he thinks is a "highly connected" vehicle, for Rs 28.70 lakh (on-road price, Noida).

"This model offers connected features like the ability to switch on the car remotely by logging onto the app. It’s a boon to have the car’s AC switched on for 10-15 minutes before leaving for office during peak summers in Delhi. Apart from that, checking the telematics is a great option when the car is being handled by the driver," stated Mahendru.

As per MarketsandMarkets, the Indian connected car market is projected to grow at a compounded annual growth rate (CAGR) of 22.2 percent from $9.8 billion in 2019 to reach $32.5 billion by 2025.

Carmakers beef up tech prowess

With consumers increasingly opting for technology-equipped cars, carmakers like Maruti Suzuki India Ltd (MSIL), Hyundai Motor India Limited (HMIL), MG Motor India, Kia India, Honda Cars India, Toyota Kirloskar Motor, Volkswagen India, and Nissan Motor India, among others, are redrawing their strategies by rolling out models that are loaded with hi-tech features.

MG Motor India, which has positioned itself as an autotech brand, revealed that it offers a host of connected features with over 50 percent penetration in its entire product portfolio, including the recently launched Comet EV.

"The way we are seeing the progression and acceptance of connected features, we have realised that we live in a connected world today, and the vehicle now becomes like your second home," stated Gaurav Gupta, Deputy Managing Director, MG Motor India. He went on to add, "If we go by these evolving trends, I will not be surprised if more than 80 percent of customers would like to have a connected car."

HMIL, which introduced its Internet-of-Things (IOT)-enabled Hyundai Bluelink connected car technology in Venue in 2019, now offers 60+ connected car features in 12 different languages across almost 80 percent of its product line-up, including the recently launched Exter micro-SUV. The South Korean carmaker has sold more than five lakh connected cars to date.

"Our new-age customers have shown a greater affinity towards models equipped with Bluelink. As a result, the connected car penetration, which stood at 25 percent during the period January-June 2022, has gone up to 30.4 percent of our total sales during the same period," Tarun Garg, Chief Operating Officer (COO), HMIL, told Moneycontrol. He added, "So, I think the connected penetration is only going to increase going forward."

HCIL claims to be the first carmaker in the country to introduce its connected car solution in the form of 'Honda Connect’ (dongle-based) in 2015. Subsequently, when it launched the 5G City in 2020, it came up with Honda Connect 2.0, which is a Telematics Control Unit (TCU)-based connected car technology.

"More than 95 percent of our current Honda City sales in the market are connected. Our new SUV Honda Elevate also comes with advanced connectivity features of Honda Connect," revealed Kunal Behl, VP Marketing and Sales, HCIL.

PV market leader Maruti Suzuki, which has expanded aggressively in the premium car segment over the last few years, has introduced connected car technologies in five of its models, including the Baleno, Ertiga, XL6, and Grand Vitara.

The penetration of connected cars in FY 2022-23 was around 45 percent of the aforementioned models, as per the company’s revelations. "With the introduction of the new Fronx and the increasing penetration of feature-rich higher variants, future penetration of connected cars is estimated to be around 56 percent of the premium models in 2023-24," revealed Shashank Srivastava, Senior Executive Officer, Marketing and Sales, MSIL.

Tata Motors revealed that the current penetration of connected vehicles is close to 15 percent of the total number of PVs (ICEVs+EVs). While the Mumbai-based firm did not share the projections, it stated that over two lakh Tata cars have been sold with connected car features across its product portfolio.

Ashish Sharma, VP - Automotive, India - Capgemini Invent, the innovation and digital transformation consulting arm of Capgemini, stated, "Today, connected car features have transitioned from being differentiating features to hygiene features," adding, "Today, all new launches and facelifts come with connected car features to some degree, if not the fullest. And consumers are now getting used to these features and are expecting a flavour in every car they buy."

However, the advent of smart technologies in vehicles has its fair share of downsides too. As Ravi Bhatia from Jato Dynamics puts it, "As with all technology platforms, the developers will need to address the security concerns around hacking. This requires OEMs (original equipment manufacturers) to make investments in a platform and develop a plan to scale up."