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October 2025
The digital transformation in automotive market is booming, poised for a revenue surge into the hundreds of millions from 2025 to 2034, driving a revolution in sustainable transportation. The digital transformation in automotive market is expanding due to factors such as increasing interest in connected vehicles, electric vehicle development, and smart manufacturing.
Automotive OEMs and suppliers are implementing digital technologies such as cloud computing, AI, and IoT-based technologies to improve information flows across production, engineering, and design, and to improve the customer experience. Additionally, government support for electric and autonomous vehicles and the need for vehicles to be cybersecure support the market growth.
The digital transformation in automotive market refers to the comprehensive integration of digital technologies across automotive value chains from design and manufacturing to connected vehicles and mobility services, enabling automation, intelligence, and new revenue models for OEMs and ecosystem partners. Digital transformation integrates each segment of the automotive market, from manufacturing and supply chain to sales and after-sales services. The adoption of new technologies includes electric and autonomous vehicles, smart factories, and connected vehicles/vehicle systems.
| Metric | Details |
| Key Drivers | Demand for connected, electric, and autonomous vehicles. Investment in AI, cloud computing, IoT, and smart manufacturing. |
| Leading Region | Asia-Pacific |
| Market Segmentation | By Core Technology, By Digital Application Area, By Deployment Model, By Vehicle Type, By Value Chain Function, By Business Model, By End User and By Region |
| Top Key Players | Toyota, Volkswagen, Ford, BMW, General Motors, and Hyundai are key players advancing digital transformation through AI, IoT, and connected vehicle technologies. |
The trends in the digital transformation in automotive market are collaboration and partnership among large companies.
The IoT & vehicle connectivity segment dominated and captured almost 32% of the market share as connected cars became a focus for the automotive sector and consumers alike. The integration of internet access, real-time diagnostics, and functionality to remotely control decisions improved safety, effectiveness, and user experience. Automakers made use of IoT to collect real-time performance data and provide predictive maintenance. Moreover, the increasing demand for smart mobility, telematics, and over-the-air software updates supported its leading position within the digital transformation of the auto industry.
The artificial intelligence & segment is expected to grow at the fastest rate in the forecasted period, as automakers apply it to advance vehicle automation, predictive analytics, and quality control. In addition to automation, AI improved design/and production, and personalization of users through its ability to analyze large data sets. Moreover, AI has also advanced autonomous driving and driver-assist systems.
The connected vehicle services segment dominated and captured almost 30% of the digital transformation in automotive market share, as manufacturers pivoted to user experience, including real-time navigation, infotainment services, and remote diagnostic capabilities. Connected services allow vehicles to communicate with each other, with roadway and built environment infrastructure, and with the cloud. The emergence of subscription-based features, updates to a vehicle's software, and fleet monitoring for businesses further drove demand. Connected solutions also allowed manufacturers to gather data about vehicle performance to improve bus safety, efficiency, and ultimately customer satisfaction in an increasingly digital vehicle experience.
The autonomous & ADAS systems segment is expected to grow at the fastest rate in the forecasted period, as safety regulations tightened and consumer interest increased in semi-autonomous vehicles. To enable lane-keeping, adaptive cruise control, self-parking capabilities, and other functions, automakers invested significantly in AI-based, radar, and vision technologies. As sensor technology, machine learning, and real-time mapping capabilities improved, manufacturers accelerated R&D in autonomous and ADAS systems.
The cloud deployment segment dominated and captured around 38% of the digital transformation in automotive market, as it offers scalability, cost savings, and the ability to process data faster for automakers. Manufacturers were using cloud platforms for digital twins, rolling software updates, and also to manage connected vehicle data. The cloud facilitated real-time collaboration with supply chains and proactively improved remote monitoring. As automakers started to build software-defined vehicles (SDVs), cloud-based systems served as the backbone for data analytics, predictive maintenance, and connected mobility services for automotive operations internationally.
The hybrid deployment segment is expected to be the fastest-growing segment in the forecasted period, as automakers seek the flexibility of combining systems residing in the cloud with those on premises. This allowed manufacturers to store data securely while simultaneously processing it faster for mission-critical automotive functions. The hybrid model allows manufacturers to use a mix of the cloud, enabling infinite resources for scaling and a level of control over the data, especially for a globally operating manufacturer handling sensitive information.
The passenger vehicles segment dominated and captured almost 41% of the digital transformation in automotive market share due to the rising demand of consumers to buy connected cars and electric vehicles. Automakers added multimedia systems, navigation, connected systems, and driver-assist technologies to improve comfort and safety, which supported the sale of passenger vehicles. Digital platforms enable automakers to monitor vehicle performance, facilitate maintenance, and define new solutions and services, drawing attention to the segment of passenger vehicles as the focus of digital transformation of automotive manufacturing.
The commercial vehicles segment is expected to grow at the fastest rate in the forecasted period, as fleet operators begin to take advantage of digital tools to enhance logistics, safety, and fuel consumption. IoT modules, such as telematics, route optimization systems, and predictive maintenance systems, are important systems for reducing costs. Additionally, fleet operators will employ AI and connectivity to monitor driver behaviors and manage fleet operations in real time, and demand for these digital transformation technologies will globally accelerate with the move toward electric and autonomous delivery vehicles.
The manufacturing operations segment dominated and captured almost 29% of the digital transformation in automotive market due to the automakers' emphasis on smart factories, automation, and digital twins to improve efficiency and reduce costs. Robotics, AI-based quality control, and real-time analytics increased production speed and accuracy. Digital manufacturing platforms enabled predictive maintenance to reduce downtime.
The R&D segment is expected to grow at the fastest rate in the forecasted period due to an increase in innovation spending by automakers as they explore EV development, autonomous driving systems, and connected technologies. It also included digital tools, such as AI simulation, virtual prototyping, and digital twins, shortened design cycles, and improved testing accuracy.
The product-as-a-service segment dominated and captured around 33% of the digital transformation in automotive market since automakers transitioned from one-time vehicle sales to ongoing, subscription-based digital offerings. The PaaS model lets consumers pay for either mobility or features included in mobility products, such as navigation, entertainment, or performance upgrades. Automakers gained the benefit of a recurring revenue stream while enhancing customer retention strategies. Utilizing cloud and connectivity technologies will allow automakers to provide customers with real-time updates to the PaaS model as well as vehicle features tailored to consumer preferences.
The data-as-a-service segment is expected to be the fastest-growing segment in the forecasted period because automakers have increasingly relied on connected car data to create alternative revenue streams. Data-as-a-Service models provide a means for manufacturers to collect, manage, analyze, and sell anonymized data about vehicles and their drivers to third parties. For example, anonymized vehicle data has become an enormous asset for fleet management, traffic analysis, and smart-city integration. As the Internet of Things (IoT) becomes more prevalent, automakers continue to identify advanced analytics tools as valuable assets associated with new revenue streams.
The automotive OEMs segment dominated and captured almost 36% of the market share since they have been the leading group adopting digital transformation across manufacturing, design, and customer engagement. OEMs have dedicated significant resources to the field of IoT, AI, and cloud platforms focused on designing and producing connected and electric vehicles. Moreover, OEMs were best positioned to digitalize processes end-to-end as they owned operational data.
The fleet operators segment is expected to grow at the fastest rate in the forecasted period due to their early adoption of IoT and AI technologies for real-time visibility of fleet operations to monitor and assist with fuel optimization and route management. Safety improvements, maintenance reduction costs, and extended vehicle life have all been by-products of the enabled technology for fleet operators. Fleet management platforms provide valuable predictive maintenance and data-rich insight to bolster overall fleet performance.
Asia-Pacific dominated and captured around 35% of the total digital transformation in automotive market. This growth was driven primarily by high uptake of electric vehicles, smart manufacturing solutions, and connected car technologies. Countries in the region have heavily invested in AI, IoT, and cloud systems to increase production capacity while lowering production costs. Strong demand for electric and hybrid vehicles, government-sponsored automation, a talented workforce, and the development of the tech infrastructure created strong opportunities for digital platforms and data-acquisition vehicles.
China led the Asia-Pacific region in the digital transformation in automotive market due to its significant automotive manufacturing base and the Chinese government's support for electric and smart vehicles. China's emphasis on producing digital factories, integrating AI, and autonomous driving contributed to the growth reported in the market and region. Large companies in China, including BYD, SAIC, and Geely, developed and deployed advanced digital tools for the design and production of vehicles. China's far-reaching access to 5G networks and investment in R&D has established it as a leader in the digital transformation in automotive market.
North America is expected to be the fastest-growing region in the digital transformation in automotive market due to its investments in R&D and being an early adopter of advanced technologies in the automotive sector. The focus of R&D in this region is primarily towards making a vehicle more desirable through improved performance, quality, and reliability by integrating digital technologies such as AI, cloud computing, and digital twins. Significant growth in EV adoption and consumer demand for connected vehicles has greatly contributed to the increase in market value in North America.
The U.S. led North America’s digital transformation in automotive market due to its well-established automotive industry allocation, strong technology ecosystem, and the presence of large automanufacturers such as Ford, General Motors, and Tesla. Their investments led to the growth of AI-based design, predictive analytics, and digital manufacturing platforms in the automotive industry. North America has a supportive policy environment for electrically driven vehicles (EVs) and autonomous vehicle technology, further energizing automotive innovation.
Europe saw significant growth in digital transformation in automotive market due to growing demand for electric vehicles, connected car technologies, and autonomous driving, with government policies actively promoting EV adoption, smart mobility, and emissions reductions, incentivizing automakers to invest further in solutions within the digital space. Major automakers concentrated on AI, IoT, and cloud platforms to increase efficiency in vehicle design, production, and customer experience. There are opportunities in smart factories, software-defined vehicles, autonomous transport systems, and data-driven mobility services, making Europe a growing region.
Germany dominated the European digital transformation in automotive market due to its established strength in the automotive industry and a position of leadership in engineering and innovation. Automotive companies, such as BMW, Mercedes-Benz, and Volkswagen, have integrated AI, IoT, and advanced driver-assistance systems to enhance vehicle production. The government vested position and opportunities for manufacturing and technology solutions to contribute to the adoption of EVs, smart mobility, and Industry 4.0. The focus of autonomous driving connected vehicles, and smart manufacturing has positioned Germany as a key automotive digital transformation hub in Europe.
| October 2025 | Announcement |
| Sigrid de Vries, ACEA Director General. | Our industry is undergoing profound transformation driven by electrification, shifting trade relationships and complex regulatory frameworks. Informed decisions require a solid evidence base. ACEA is a household name, providing dedicated policy advice and automotive industry information to a broad group of stakeholders. Operating independently, ACEA:intelligence sets out to unlock uniquely aggregated data to an international audience of professionals and experts. |
| September 2025 | Announcement |
| Enrico Salvatori, Senior Vice President and President, Qualcomm Europe/MEA, Qualcomm Technologies, Inc. | This technology collaboration with Harman represents a pivotal moment in automotive innovation. Together, we’re bringing the power of AI to the cockpit, transforming how drivers and passengers interact with their vehicles. |
| September 2025 | Announcement |
| Andy Fillmore, Mayor of Halifax. | We're thrilled to welcome DXC's new Innovation Centre to Halifax. It's another sign of our city's growing reputation as one of Canada's leading centres for technology and innovation and a place where talent, creativity, and big ideas come together to build the future. DXC's investment will mean new opportunities for our residents, strong partnerships with our post-secondary institutions, and innovative solutions that reach far beyond our city limits. |
| June 2025 | Announcement |
| Akhilesh Tiwari, President, Communications, Media and Information Services, TCS. | TCS is proud to collaborate with NVIDIA to design a broad spectrum of AI-native solutions that not only address mission-critical challenges but also unlock new revenue growth opportunities for our telecom customers. By combining our deep industry expertise with NVIDIA’s advanced AI capabilities, we’ve helped create differentiated, domain-specific solutions that enhance core processes and equip telecom providers with future-ready technologies. This collaboration enables our customers to gain early access to curated AI frameworks and services - empowering them with a first-mover advantage in an increasingly dynamic and competitive landscape. |
| June 2025 | Announcement |
| Chris Penrose, Vice President of Business Development, Telco at NVIDIA. | AI is transforming telecom infrastructure and operations, enabling business growth, efficiency and productivity gains, at a pace unseen before. TCS is supercharging the adoption of AI in telcos worldwide, with their advanced AI-Native use-cases developed using NVIDIA AI technologies, enabling telecom providers to deploy, integrate and scale AI and speed up time to first outcomes. |
The digital transformation in automotive market is highly competitive. Some of the prominent players in the market are Toyota Motor Corporation, Volkswagen Group, Hyundai Motor Group, Stellantis, General Motors, Ford Motor Company, Honda Motor Co., Ltd., Nissan Motor Co., Ltd., BMW Group, Mercedes-Benz Group, BYD Auto Co., Ltd, SAIC Motor Corporation Limited, Geely Auto Group, Renault Group, Tata Motors Limited, Suzuki Motor Corporation, Tesla, Inc., Changan Automobile Group, Mazda Motor Corporation, and Mitsubishi Motors Corporation. These companies are working towards gaining a leadership position by incorporating advanced technologies, modernizing their factories, and changing their revenue models. These companies partnered or created joint ventures for software and electrification development. In addition, they invested in cloud-based infrastructure, real-time data analysis, automation, and enhanced cybersecurity to gain market dominance.
| Company | About |
| Toyota Motor Corporation | Toyota Motor Corporation was established in 1937. The company emphasized digital transformation of mobility by incorporating artificial intelligence (AI), the Internet of Things (IoT), and connected car technologies into its vehicles. It utilized smart manufacturing and data-driven solutions to enhance efficiency, safety, and the development of electric vehicles. |
| Volkswagen Group | The Volkswagen Group was founded in 1937. The organization invested in connected vehicles, autonomous driving systems (ADS), and cloud-based digital platforms. The company utilized AI and software tools to modernize production and improve electric and intelligent mobility solutions in the automotive market. |
| Hyundai Motor Group | The Hyundai Motor Group was founded in 1967. The organization adopted digital technologies, including AI, IoT, and connected services, to improve vehicle safety, efficiency, and customer experience. The company addressed electric vehicles and smart manufacturing solutions. |
| Stellantis | Stellantis was formed in 2021 after the merger of multiple automobile brands. Stellantis implemented digital platforms, connected vehicles, and AI-driven solutions to improve vehicle design, manufacturing efficiency, and smart mobility services in global markets. |
| General Motors | General Motors was founded in 1908. The company adopted AI, IoT, and ADS technology to develop connected vehicles, electric vehicles, and smart factories. GM emphasized innovation, improving vehicle safety, efficiency, and digital customer experience. |
| Ford Motor Company | Ford Motor Company was founded in 1903. The company incorporated digital transformation tools, such as connected car platforms, AI, and cloud computing, to improve manufacturing, vehicle intelligence, and mobility services for electric and autonomous vehicles. |
| Honda Motor Co., Ltd. | Honda Motor Co., Ltd. was founded in 1948. The company harnessed AI, IoT, and smart manufacturing technology to improve safety, efficiency, and connectivity for vehicles. Honda concentrated on digital solutions for electric vehicles, autonomous driving, and connected mobility. |
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By Core Technology
By Digital Application Area
By Deployment Model
By Vehicle Type
By Value Chain Function
By Business Model
By End User
By Region
October 2025
October 2025
October 2025
October 2025
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