By 2016 most cars will have smartphone integration, according to a report from Juniper Research, a UK wireless technology research firm.
Aftermarket systems, such as SatNav and handsfree systems, will help push the sector to US$1.4 billion ($1.8 billion) in four years and give 92 million vehicles internet connectivity, according to Forbes magazine.
This technology will allow satellite-based navigation and streaming music live, for example, and open up a whole new market to telematics services now only offered through automaker-specific subscription plans like GM's OnStar and BMW Assist.
These sophisticated satellite-linked systems can automatically dispatch emergency services to the scene of an accident, help law enforcement agencies locate stolen vehicles, and even disable them in some cases.
Parts suppliers and consumer electronics companies are working together to create a standardised protocol called MirrorLink, being overseen by America's Car Connectivity Consortium, which was established in February 2011 expressly for this purpose.
Currently, each automaker has its own proprietary protocol for in-vehicle electronics, making it impossible for electronics companies to produce a single smartphone pairing device that would work with all vehicles.
The US is ahead of other geographical areas in developing telematics technology for vehicles, Juniper says. Ford has led the way with its Microsoft-based Sync system, one of the first to integrate advanced smartphone functionality such as voice recognition in non-luxury vehicles.
The Sync system will be available in New Zealand this year or early 2013.
Another American company, General Motors, already offers an aftermarket telematics system, called OnStar For My Vehicle or FMV, that brings its navigation, traffic, safety and other services to non-GM vehicles.
Nuance Communications is a step ahead and has unveiled a voice feature for automobiles call Dragon Drive! that will let you send and receive text messages and email using natural language.
You can say: Send a text to Anna Smith, 'I'm stuck in traffic. I'll be at the office as soon as possible'.
An alert will also sound when there's an incoming message. You can say, "Listen to the email from Alex" and Nuance's human-like text-to-speech feature will read it to you.
You can then respond: "Reply to Alex, 'Sushi sounds great. See you at 7."
What makes it unique is that Dragon Drive! incorporates both the car's embedded computers and the cloud-based features of in-car infotainment systems.
Messaging capability, available in six languages (US and UK English, French, Italian, German and Spanish), is the first application for Dragon Drive! Coming soon you'll be able to ask your car to download new songs, find restaurants or search news headlines.
The first cars to offer Dragon Drive! will be unveiled early in the US in the coming months, according to Nuance executive vice-president Mike Thompson.