Growth drivers such as the mushrooming demand for connected cars, surging research and development (R&D) in autonomous driving (AD), and rising adoption of innovative technologies for advanced user interfaces will accelerate the automotive software market at a CAGR of 12.4% during the forecast period (2020–2030). The market was valued at $28,214.6 million in 2019 and it is expected to reach a revenue of $78,894.2 million by 2030. In recent years, the increasing practice of updating automobile systems by using over-the-air (OTA) technology has become a prominent market trend.

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One of the key factors behind the automotive software market growth is the soaring demand for connected cars, primarily on account of the rapid urbanization across the world. The rising demand for such cars can also be credited to the escalating concerns for vehicle safety and security, booming demand for an enhanced driving experience, and surging integration of the internet of things (IoT) technology in the automobile industry. Automakers are using IoT to attain pathbreaking results in the connectivity solutions integrated into connected cars.

Another factor supporting the automotive software market growth is the increasing adoption of innovative technologies for advanced user interface by automakers across the world. As the automobile technology is becoming more advanced, it has become necessary to design more humane and personalized technologies. For instance, Tesla Inc. offers few physical controls on or near the steering wheel in its Model S. However, most of the secondary features, including climate control, rear-view mirror, cell phone, and media player, do not have any dedicated physical controls. These functions can be accessed through a touchscreen display, available on the vehicle's dashboard.

Moreover, the increasing R&D being conducted in autonomous technology will also contribute to the growth of the automotive software market worldwide. As autonomous technology is entirely dependent on software, the mounting effort to integrate self-driving solutions in vehicles is generating a substantial demand for automobile software. The rising integration of Level 1 and Level 2 autonomous features in vehicles is, therefore, augmenting the demand for automotive software worldwide. Further, the growing focus on R&D and testing of Level 4 and Level 5 autonomy in vehicles in different cities across the globe, is also facilitating the market growth.

The software segment of the automotive software market is categorized into advanced driver assistance systems (ADAS) and AD, body and energy, powertrain and chassis, operating system (OS) and middleware, and infotainment, connectivity, security, and connected services. Among these, the ADAS and AD category held the largest market share during the historical period (2014–2019) and it is expected to demonstrate the fastest growth during the forecast period, due to the surging awareness regarding road and vehicle safety, at both the government and individual levels. Adoption of lane assist, automatic braking, and ADAS technologies enhance vehicular safety and improve the driving experience.

Globally, the Asia-Pacific (APAC) automotive software market generated the highest revenue in 2019 and it is expected to retain its position throughout the forecast period. This can be credited to the factors such as rapid economic development, the presence of the largest automobile market, and the soaring purchasing power of customers in the region. The flourishing economy of APAC countries is fueling the demand for advanced applications, such as auto-park assist, human-machine interfaces (HMI), and keyless entry, which are dependent on automotive software.

Thus, the burgeoning demand for connected cars, rising integration of innovative technologies for advanced user interface, and mounting R&D activities being conducted in autonomous technology will drive the demand for automotive software in the foreseeable future.