The past 12 months have seen much talk about the concept of 'the connected car', a vehicle equipped with electronic devices connected to others both within and outside the vehicle. It is bringing in a new stream of companies and tech to the European automotive supply chain.

The confluence of communication technologies, data systems and safety engineering is leading to an increased level of automation in vehicles and in time may bring us the fully autonomous car, also known as the robotic vehicle. This driverless car could bring big changes in how cars are owned and used, and may help further the development of the sharing economy. Car sharing is forecast to grow from the current 2.3 million participants globally to 12 million by 2020.

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Big tech companies are getting involved with the automotive industry. This year’s introduction of Apple’s Car Play system, followed by Google’s Android Auto, show that things are getting serious. Other players taking an interest include telecoms companies, makers of networking equipment, consumer hardware producers, software firms and mobile app creators. 

This is a market that management consulting firm McKinsey & Company estimates to be worth €30bn, with the potential to be worth €170bn by 2020. Telecoms company Telefónica reports that about 10% of today’s cars can be considered connected, but by 2020 this is expected to rise to 90%, with a mix of 2G, 3G and 4G connectivity. European car manufacturers including Audi, BMW, Mercedes-Benz and Volvo are leading the way in this connectivity, and drivers prioritising safety, early-warning systems (diagnostics) and smarter navigation and parking make it a huge market opportunity. The European automotive industry will need to stay on the line to keep up with the gathering speed of the connected car.        

Douglas Clark is director of Location Connections, a site selection and FDI consultancy. Email: douglas@locationconnections.com