Automotive Extended Reality Market size is estimated to surpass USD 900 billion by the end of 2036, growing at a CAGR of 5% during the forecast period i.e., 2024-2036. In the year 2023, the industry size of automotive extended reality was around USD 41 billion. The growth of the market can be attributed to the rapid development of virtual reality (VR) technology, in the form of extended reality (XR). XR Cars uses a combination of virtual reality and augmented reality to provide virtual sales opportunities for auto manufacturers and sellers. Customers can view and experience all the features of any car model from the comfort of home, where virtual reality is available. More than 70% of young people consider the emerging technologies and interactive features to be extremely useful and engaging when buying a vehicle, as well as their preference for purchasing vehicles from an XR car dealer.
In addition, the increase in sales of automobiles with the adopted of new technologies such as automotive dealer management system is one of the largest growth drivers for the market is expected to be supported by an increasing use of XR in the automotive sector. The technology is not yet widely implemented on the ground, but it is expected to grow significantly over the period from 2025 onwards and have a significant share by 2030.
Growth Drivers
Challenges
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Base Year |
2023 |
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Forecast Year |
2024 – 2036 |
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CAGR |
~5% |
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Base Year Market Size |
~USD 41 billion |
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Forecast Year Market Size |
~USD 900 billion |
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Regional Scope |
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Component (Virtual Reality, Augmented Reality, Mixed Reality)
the AR segment is estimated to hold around 40% share of the global automotive extended reality market by the end of 2036. For a variety of reasons, AR's dominant position on the XR automotive market is due to its ability to work in a broad range of applications within the vehicle industry from visual aids to hands free maintenance instructions. Moreover, compared with traditional 2D interfaces, the experience of Augmented Reality is more interactive and engaging for users. It's also an ideal tool to be used in car applications because it can interact at the same time with virtual objects. The use of AR in automotive sector widely can be seen in self-driving cars and autonomous cars. By 2040 there will be 75% autonomous cars running on road that will include AR technology.
Application (Automobile Sales, Virtual Testing)
Automotive extended reality market from the virtual testing segment is estimated to hold the highest revenue during the forecast period. Car manufacturers can replicate the real world drive conditions and vehicle tests in a safe, regulated environment by means of virtual testing. Virtual testing also eliminates the need for physical prototypes, which saves both time and money when performing a test.
Our in-depth analysis of the global market includes the following segments:
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Component |
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Application |
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North America Market Forecasts
The automotive extended reality market in the North America is estimated to hold 35% of the revenue share by the end of 2036. A number of factors, including the fact that North America has been known to adopt emerging technologies like augmented reality before, can be considered as driving growth in this market. Therefore, manufacturers and suppliers in the region have started to invest in augmented reality solutions for improving their operations as well as enhancing customers' experience. In addition, there is a strong car manufacturing sector in the region with many manufacturers, service providers and distributors active on the market. The United States is one of the countries with the world's leading automobile industry, contributing at least 3% to the country's gross domestic product (GDP). The country produced nearly 8.82 million vehicles in 2020. This further is driving the growth of extended reality in automotive industry of North America region in the projected period.
Asia Pacific Market Statistics
The automotive extended reality market in the Asia Pacific region is estimated to grow significantly during the forecast period. The urbanization rate in the Asia Pacific region is expanding rapidly that is resulting in growing demand for personal vehicles. This is increasing the demand for automotive XR technology in the region during the projected period.
Author Credits: Harshita Srivastava, Saima Khursheed
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