Market Overview

As the electrification penetrates in the global automotive market rapidly, electric vehicles (BEVs) are spreading particularly in China, the U.S., and European markets. Concurrently, automakers have started offering connected services that utilize smartphone apps by installing the latest in-vehicle infotainment (information and entertainment) systems as standard equipment. Virtual car keys have been integrated as a part of the packaged connected services, including emergency call system(e-call). The pace of installing virtual car keys is accelerating especially in the U.S. and the EU, where installation of eCall is mandatory.

On the other hand, the domestic demand for connected services is rather small. This attributes to the fact that 1) Japan is a small country with relatively small number of dangerous remote areas, while 2) drivers generally maintain vehicles quite well because of the vehicle inspection validity system, while 3) distance per drive is relatively short, and 5) even in the case of having an accident, coverage of roadside dealership network and roadside assistance is extensive that you can rely on it. For these reasons, Japan has been behind overseas markets in introduction of connected services or virtual car keys. While many of the car models released in 2019 onward are connected cars, the level of virtual car keys system introduction varies among Japanese automakers.

Noteworthy Topics

Introduction of UWB Technology

Since a major smartphone maker has introduced Ultra-Wideband (UWB) chip on its products, other makers are increasingly adopting UWB on their products. As UWB excels in (1)precision in determining the location, (2) data connectivity, and (3) data security (minimal interference with other communication signals), Car Connectivity Consortium (CCC)’s latest Digital Key release 3.0 (3.0 v1.1）has additionally adopted UWB and BLE (Bluetooth Low Energy). UWB technology is noteworthy for providing enhanced car security. Although the adoption of UWB as a communication system for connected services is still limited to a few German automakers as of 2023, due to its high security features, the number of automobile manufacturers deploying UWB technology is expected to increase hereafter.

Future Outlook

The domestic shipment volume of automobiles equipped with virtual car key system is estimated to attain 2,074,500 units in 2023 and grow to 2,578,500 units by 2027.

Even though the domestic demand for cars equipped with virtual car key is relatively small at present, it is edging upwards in accordance with the trend of connected cars (including the adoption of virtual car key system) in the global automotive market, particularly in the US, EU countries, and China. Driven by the spread of connect cars led by the German passenger cars (imports) that are already offered with connected car services, the adoption of virtual car key systems is expected to grow in Japan for years to come. Furthermore, the growing interest in Mobility as a Service (MaaS) business and introduction of 5G (5th generation communication service) is expected to propel the utilization of virtual car key system as a platform for MaaS business, such as car rental and car sharing.

Research Outline