China’s motorists are developing more sophisticated tastes in car electronics, shifting their demand from simple audio systems to full navigation and telematics solutions – a development that will cause the country’s automotive OEM infotainment systems market to rise by a factor of three from 2012 to 2020.
The total market revenue for OEM infotainment systems in China is set to expand to $7.1 billion in 2020, up from $2.3 billion in 2012, according to a new report entitled "In-Car Audio, Infotainment & Driver Information Systems – China – 2013" from IHS Automotive, part of IHS Inc. (NYSE: IHS), a leading global source of critical information and insight. Revenue this year is expected to surge by 26% to reach nearly $3 billion, as presented in the attached figure.
The market for OEM infotainment systems includes basic audio, audio/video, navigation, telematics and rear-seat infotainment equipment that is installed in cars by OEMs. A major factor driving the growth of revenue in China is the fact that navigation and telematics are more expensive than simple audio systems.
Navigation systems find fast growth
"The market for in-vehicle navigation is booming in China, leading the way for the growth in the OEM infotainment market,” said Michael Liu, senior analyst, China automotive electronics, at IHS. “By 2020, shipments of navigation systems will reach 8.2 million units, accounting for 35% of all the passenger light vehicles sold in China. This is largely because OEM navigation systems are expected to be featured in more mid- and entry-level light vehicle models. The falling pricing is one reason, but another important factor has to do with the fact that China’s road infrastructure is developing so quickly and navigation is becoming a must-have feature."
Audio systems keep the volume up
Although OEM navigation and telematics are gaining popularity in China, audio is still the major infotainment product type in China. IHS estimates that 83% of all passenger vehicles, including cars, sports utility vehicles and multipurpose vehicles sold in China during 2012 were still equipped with audio systems alone – and with no other infotainment features.
But because of the increasing installation of OEM navigation and embedded telematics systems, the fitment rate of OEM audio systems is forecast to drop steadily. Even so, OEM audio is forecast to remain the largest infotainment category in 2020.
At the same time, the market in China for OEM audio/video systems is phasing out quickly. Safety issues and limited demand among passengers for watching video content while in the car are the two major reasons for this. For their part, most suppliers upgraded their audio/video systems to navigation products a long time ago.
Telematics on the rise
Although still in its early phases in China, telematics is already of very high interest to vehicle manufacturers and consumers.
OEM-embedded telematics systems will be mainly installed in high-end and luxury light vehicles, with fitment rates forecast to increase quickly to reach 15% in 2020, up from just 1% in 2012.This is because most luxury vehicles are expected to have OEM telematics systems in the future.
Given the steady rise in income among Chinese consumers on average, the proportion of luxury vehicles among the population will also increase, giving way to more high-end vehicles equipped with OEM telematics systems. As a result, market revenue is forecast to quickly climb to $1.9 billion in 2020, up from only $122 million in 2012.
The Chinese in-vehicle infotainment market remains huge with plenty of opportunities overall. Still, companies can experience difficulties in coming up with product portfolios future-proofed to meet the needs of consumers.
Because of this, it is vitally important that companies examine future trends and take consumer preferences into careful consideration when developing new products, IHS believes.
For more information, please contact:
Jonathan Cassell
Senior Manager, Editorial
jonathan.cassell@ihs.com
Direct: + 1 408 654 1714
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