Global Automotive Digital Key Market By Vehicle Type (Passenger Vehicles and Commercial Vehicles), By Application (Multi-Function and Single-Function), By Connectivity (Near Field Communication (NFC), Bluetooth, Wi-Fi, Remote Cloud Key Access, and Other Connectivity), By Distribution Channel (Original Equipment Manufacturer (OEM) and Aftermarket), By Region and Companies - Industry Segment Outlook, Market Assessment, Competition Scenario, Trends, and Forecast 2023-2032

Report Overview

The global automotive digital key market was valued at US$ 1.44 billion in 2022 and expected to grow US$ 7.7 billion. Between 2023 and 2032, this market is estimated to register a CAGR of 18.8%.

An automotive digital key is an electronic key that enables one to unlock and start a vehicle using a device such as a smartphone or a smartwatch. Due to technological advancements in recent years, vehicle keys have seen significant changes. Digital keys offer several advantages over their analog counterparts, including convenience, security, and flexibility; they use Bluetooth, near-field communication (NFC), and other wireless technologies to communicate with the car’s onboard systems. Furthermore, digital keys can easily be revoked or updated if lost or stolen, significantly reducing the risk of unauthorized entry into your vehicle.

Driving Factors

Increasing Digitization and Automation of devices

Automotive digital key technology offers the convenience of keyless entry and starting, eliminating the need to carry a physical key. Drivers can access their keys through mobile devices, smartwatches, or other electronic devices with ease; making it simpler than ever for them to get into and start their vehicles. The demand for digitization and automation of devices is on the rise in developing economies due to an increase in disposable income among the population. With increased disposable income, consumers demand more advanced features that enhance convenience and safety. Furthermore, government policies promote digital key markets within vehicles to reduce carbon emissions and enhance fuel efficiency.

Restraining Factors

Rising Cybersecurity Risks

Digital keys can be vulnerable to cybersecurity risks like hacking or unauthorized access, which could pose a risk for both the vehicle and its driver. Automotive digital key technology relies on wireless communication, which may be disrupted by signal interference or other environmental elements. This can lead to reliability issues such as difficulty unlocking or starting the vehicle. It can be expensive to develop and implement, increasing the cost of vehicles for consumers. Furthermore, retrofitting older vehicles with digital key technology may pose additional hurdles for those wanting to update their ride. Automotive digital key technology must meet stringent regulatory requirements, such as cybersecurity standards and data privacy laws. Adhering to these demands can add complexity and expense to the development and implementation of digital key technology.

Opportunity

Innovation and Technological Advancements

Automotive digital key technology presents an ideal platform for collaboration between automotive companies, technology firms, and mobile device makers. These collaborations can foster innovation and enhance the functionality and accessibility of digital key technology. The COVID-19 pandemic has driven demand for contactless technologies, such as automotive digital key technology. As consumers seek to reduce physical contact and maintain safety and convenience, digital key technology provides a secure and convenient alternative to traditional physical keys. Digital key technology can improve user experiences by offering a more personalized and convenient way to access and start vehicles. Furthermore, these keys may also be utilized for additional services like remote vehicle monitoring and control that further enhance this benefit. Automotive digital key technology also helps reduce the environmental impacts of traditional keys by eliminating the need for physical keys – thus decreasing waste production and conserving resources for consumers as well as society at large.

Trending Factors

Investments in Advanced Encryption Technology

Digital key solutions are becoming growingly used in luxury vehicles and the mid-range segment due to the rise of connected cars. Digital keys can be seamlessly integrated with connected car technologies, enabling users to control various functions remotely such as locking/unlocking doors, starting the engine, and setting the temperature. The exposure of mobile-based solutions in the digital key market is spurring innovation. These services offer greater convenience and security, as users can remotely manage access to their vehicles. As these systems become more commonplace, cybersecurity has become a top concern for automakers. To protect against cyberattacks and guarantee the safety of digital key solutions, manufacturers are investing in advanced encryption technologies.

COVID-19 Impact Analysis

The production and distribution of automotive digital key components have been severely hindered by the COVID-19 epidemic, which disrupted worldwide supply chains. As a result, delivery timeframes for digital key solutions have been delayed, leading to higher pricing. Furthermore, there has been an abrupt decrease in car sales which directly impacts demand for these services: fewer units were sold resulting in decreased supplies and higher prices as demand diminished.

In light of the COVID-19 outbreak, remote access systems for vehicles have seen an uptick in demand. Automotive digital key solutions offer drivers the ability to operate their cars remotely without making physical contact, though its long-term effect on this market remains uncertain. Nonetheless, digital technologies have seen exponential growth within the automotive industry – which appears likely to continue even post-pandemic.

Vehicle Type Analysis

The Passenger Vehicles Segment is Dominant

Based on vehicle type, the market for an automotive digital key is segmented into passenger vehicles and commercial vehicles. Among these types, the passenger vehicles segment is the most lucrative in the global automotive digital key market, with a projected CAGR of 19.2%. The total revenue share of passenger vehicles-type automotive digital key is 74% in 2022. Followed by commercial vehicles-type, its estimated market share is 26.0% in 2022. The growing population with more disposable income has driven up demand for passenger cars with digital features. Consumer spending on luxury vehicles equipped with automated systems has grown as people strive to improve their standard of living and social standing, leading to expansion in this segment of the automotive digital key market.

Application Analysis

The Multi-Function Segment is Dominant

By application, the automotive digital key market is further classified as multi-function and single-function. The multi-function segment is expected to be the most lucrative segment in the global automotive digital key market with a share of 55% and a projected CAGR of 16.8% by 2022. Followed by single-function, it holds 45% of the total global market share. The growing demand for passenger vehicles that offer all features on one device in developing economies has dominated the market segment. The digital key requires effective network infrastructure for successful implementation which foster quality and enhance functionality and accessibility.

Connectivity Analysis

The Near Field Communication (NFC) Segment is Dominant

Based on connectivity, the automotive digital key market is divided into near-field communication, wi-fi, Bluetooth,  remote cloud key access, and other connectivity. Among this connectivity, the near field communication (NFC) segment is estimated to be the most attractive segment in terms of profitability in the global automotive digital key market with the largest revenue share of 30.5% and a projected CAGR of 19.5% during the forecast period. Near Field Communication (NFC) is a mid-range wireless communication technology that enables data exchange between two devices located close to each other. NFC utilizes encryption during transmission, making it difficult for unauthorized parties to intercept or steal sensitive information. NFC systems offer an advantage over other technologies in terms of security features and will continue driving the growth of this market.

Distribution Channel Analysis

The Original Equipment Manufacturer (OEM) Segment is Dominant

Based on the distribution channel, the market is further divided into original equipment manufacturer (OEM) and aftermarket. Among these distribution channels, the original equipment manufacturer (OEM) segment is estimated to be the most lucrative segment in the global automotive digital key market, with the largest revenue share of 57% and a projected CAGR of 17.7% during the forecast period. OEMs develop and sell many automotive digital key solutions. Customers can purchase this technology either as an optional feature or as standard equipment on new vehicles through the OEM’s dealership network.  Followed by the aftermarket, its estimated market share is 43% in 2022. Some companies specialize in developing and selling digital key technology that can be retrofitted to existing vehicles. These aftermarket suppliers may sell their products online, through automotive retailers, or partnerships with installation service providers.

Key Market Segments

Based on Vehicle Type

• Passenger Vehicles
• Commercial Vehicles

Based on Application

• Multi-Function
• Single-Function

Based on Connectivity

• Near Field Communication (NFC)
• Bluetooth
• Wi-Fi
• Remote Cloud Key Access
• Other Connectivity

Based on Distribution Channel

• Original Equipment Manufacturer (OEM)
• Aftermarket

Regional Analysis

The APAC is the Most Dominant Region in the Global Automotive Digital Key Market

Asia Pacific is estimated to be the most lucrative market in the global automotive digital key with the largest revenue share of 37% and is expected to register a CAGR of 17.5% during the forecast period. The region shows substantial growth in the respected market owing to the increasing demand for connected cars and advanced digital technologies in developing economies such as China and India. China leads the automotive digital key market in the region. Also, North America is one of the largest automotive digital key markets with prominent automotive manufacturers and technology firms that are investing heavily in developing cutting-edge digital key solutions.

Key Regions and Countries Covered in this Report:

• North America
  • The US
  • Canada
  • Mexico
• Western Europe
  • Germany
  • France
  • The UK
  • Spain
  • Italy
  • Portugal
  • Ireland
  • Austria
  • Switzerland
  • Benelux
  • Nordic
  • Rest of Western Europe
• Eastern Europe
  • Russia
  • Poland
  • The Czech Republic
  • Greece
  • Rest of Eastern Europe
• APAC
  • China
  • Japan
  • South Korea
  • India
  • Australia & New Zealand
  • Indonesia
  • Malaysia
  • Philippines
  • Singapore
  • Thailand
  • Vietnam
  • Rest of APAC
• Latin America
  • Brazil
  • Colombia
  • Chile
  • Argentina
  • Costa Rica
  • Rest of Latin America
• Middle East & Africa
  • Algeria
  • Egypt
  • Israel
  • Kuwait
  • Nigeria
  • Saudi Arabia
  • South Africa
  • Turkey
  • United Arab Emirates
  • Rest of MEA

Market Share & Key Players Analysis:

The global automotive digital key market is highly competitive, with several key players operating within it. These firms are employing various strategies such as partnerships and collaborations to strengthen their positions in the market. For instance, Denso Corporation and NTT Docomo Inc. collaborated on a smartphone-based digital key solution that allows users to lock/unlock their cars remotely and start the engine using smartphones; Continental AG followed suit in 2015 by launching an electronic key solution that allowed users to access their cars using smartphones.

Recent Developments:

• Hyundai’s digital key technology was launched in September 2021, enabling drivers to unlock and start their Hyundai cars using a smartphone. It uses near-field communication (NFC) technology for communication with the car and is available for select Hyundai models.
• Volkswagen announced in February 2021 that they had joined forces with Samsung to create a digital key platform. This platform works with Samsung smartwatches and smartphones equipped with NFC technology.

Listed below are some of the most prominent automotive digital key industry players.

Market Key Players:

• Hyundai Mobis
• Volkswagen AG
• Denso Corporation
• Samsung Electronics Co. Ltd.
• HELLA
• Robert Bosch
• GmbH
• Tesla Inc.
• Infineon Technologies
• BMW AG
• STMicroelectronics
• Continental AG
• Daimler AG
• Ericsson
• Valeo SA
• Other Key Players

Report Scope: