The Heads-up Display (HUD) is one of the most perceptible modules in smart cockpits. The current market is in a phase of rapid development, gradually penetrating from high-end vehicles to mid-range models.In the future, with technological optimization and the popularization of smart vehicles, Augmented Reality (AR) HUDs are expected to become standard equipment for smart connected cars.The domestic market was previously monopolized by international enterprises, but in recent years, domestic manufacturers have been driving market share growth due to cost advantages and the rise of local brands, placing them in the first tier in the AR-HUD field.
01. Product Overview
The Heads-up Display (HUD) is an optical device that works similarly to a projector, projecting the information that needs to be displayed onto a transparent medium (such as a windshield) in front of the driver. It displays real-time information such as speed, engine RPM, gear status, turn signals, navigation prompts, fault alerts, cruise status, and distance to the vehicle ahead, allowing drivers to view important driving information without looking down or turning their heads, greatly improving driving efficiency and safety. HUDs were first used in military aircraft and began to be applied to automobiles in the late 1980s. With the development of automotive intelligence, HUDs have become an important part of human-machine interaction in vehicles, and their penetration rate continues to increase. The technical principles of HUD are illustrated in the figure below.
Figure 1 Technical Principles of HUD
Source: Zhihua Innovation Research Center, Zheshang Securities.
Based on technological advancements and product iterations, HUD products can be roughly divided into four categories: C-HUD (Combiner HUD), W-HUD (Windshield HUD), AR-HUD (Augmented Reality HUD), and Panoramic HUD.
C-HUD displays information such as speed and gear through a hardware display screen (simple graphics and text), is relatively low-cost, but has a short imaging distance, poor imaging quality, and safety hazards. As W/AR-HUDs are mass-produced and their prices drop significantly, C-HUDs are gradually being phased out.
W-HUD projects information directly onto the windshield, improving on C-HUD in terms of imaging size and quality. This technology is relatively mature and cost-effective, making it the mainstream HUD solution, which will continue to grow rapidly in the short term.
AR-HUD utilizes augmented reality technology, deeply integrates with smart connected data, and combines information from cameras, radar, high-precision maps, etc., to achieve the overlay of virtual images and reality. For example, navigation information can be displayed on the HUD during driving, integrated with the actual road conditions, and can also provide forward collision warnings, lane departure warnings, and traffic sign recognition, timely alerting of road conditions and pedestrian warnings. Additionally, it can combine vehicle data from the on-board computer with real-world scenarios, greatly expanding the use cases of HUDs. AR-HUDs offer a larger display range and longer imaging distance, but at a higher cost. In the future, as technology improves and smart vehicles become more common, AR-HUDs are expected to gradually replace W-HUDs, becoming the standard for smart connected vehicles.
Panoramic HUD combines 3D technology and AR display, applicable to L4 and above autonomous driving, displaying more information through large imaging sizes while being compatible with both near and far imaging. However, it is still far from commercial application.
Table 1 Comparison of Different HUD Product Categories
Source: White Paper on Augmented Reality HUD, Huayang Group Official Website, Zheshang Securities, Ping An Securities, and the Shenzhen Investment Industry Research Institute.
Currently, the core component of HUD, the Picture Generation Unit (PGU), can utilize various technological routes including TFT-LCD (Thin-Film Transistor Liquid Crystal Display Technology), DLP (Digital Light Processing Technology), LCoS (Liquid Crystal on Silicon), LBS (Laser Scanning Projection), and Micro-LED (Micro Light Emitting Diode). Among these, the TFT solution, due to its lower cost, has become the mainstream choice in the automotive market and is expected to be the standard configuration for mid-range and lower-end models of domestic brands, while DLP or LCOS-based solutions will be the main configuration for high-end models. LBS and Micro-LED still face challenges in technological breakthroughs and mass production.
02. Industry Chain
The upstream of the HUD industry chain mainly includes hardware components such as image sources (PGU), optical components, PCBA, and structural parts. Additionally, the installation of HUDs requires customized production of the vehicle’s front windshield. The technical barriers of HUD mainly exist in PGU, free-form mirrors, and windshields, as illustrated in the figure below.
Figure 2 HUD Industry Chain
Source: Shenzhen Investment Industry Research Institute.
——PGU Imaging Unit. From the perspective of the cost structure of the hardware itself, the PGU imaging unit accounts for a significant portion of the overall cost of HUDs, making up to 50% of the total BOM. The optical components account for about 20%. Different PGU imaging technologies (TFT-LCD, DLP, LCoS, and LBS) have different cost structures. According to statistics from Gasgoo, the PGU based on the TFT route accounts for about 30% of the total cost of AR-HUD, while the PGU based on the LCOS route accounts for about 40%, and the PGU based on the DLP route accounts for over 50% of the total cost.
——Free-form Mirrors. The windshield is an irregular free-form surface, and normal projected images will be distorted after reflecting off the windshield. Free-form mirrors and windshields need to be fitted and matched to minimize static distortion, dynamic distortion, and binocular parallax issues. The molds for free-form mirrors need to be manufactured with precision instruments to achieve nanometer-level accuracy. Aspheric mirrors require single-forming, such as W-shaped HUD free-form mirrors, which are generally made from PC or COC plastic materials, and must have high surface precision, high reflectivity, and good weather resistance.
——Wedge-shaped PVB Film. The wedge-shaped PVB film is a key material in the HUD windshield system. The HUD light source needs to project real images onto the windshield and then reflect them into the human eye. However, the windshield has two layers, and when the same beam of light hits the glass, it can cause two reflected beams, resulting in “ghosting.” The main solution is to design the PVB film layer in the laminated glass to be wedge-shaped, i.e., thicker at the top and thinner at the bottom, using wedge-shaped PVB films in laminated glass to adjust the reflected light. Due to its unique shape, the manufacturing cost is relatively high, and the cost of a windshield with a wedge-shaped PVB film is approximately 350 yuan higher than that of a standard windshield.
03. Market Size
The HUD market is in a phase of rapid development, with the current penetration rate of front-mounted standard configurations in the domestic market reaching 10%. According to data from the High-Tech Automotive Research Institute, from 2020 to 2022, the number of front-mounted W/AR-HUDs in the Chinese market (excluding imports and exports) increased from 692,900 units to 1,500,400 units, with a mounting rate of 7.53% in 2022, averaging an increase of about 2 percentage points per year. From January to September 2023, the number of front-mounted W/AR-HUDs delivered in the Chinese market (excluding imports and exports) reached 1,495,400 units, a year-on-year increase of 45.86%. Since July 2023, the mounting rate of HUDs has exceeded 10% for three consecutive months, with the monthly delivery in September exceeding 200,000 units for the first time. It is expected that the front-mounted delivery volume of HUDs in the Chinese market will exceed 2.2 million units in 2023.
Figure 3 Front-mounted W/AR-HUD Delivery Volume in the Domestic Market from 2020 to September 2023
Source: High-Tech Automotive Research Institute, Shenzhen Investment Industry Research Institute.
The growth rate of AR-HUDs exceeds that of the overall HUD market. According to data from the High-Tech Automotive Research Institute, in 2021, the number of front-mounted AR-HUDs in the Chinese market (excluding imports and exports) was approximately 50,800 units, which grew to 109,600 units in 2022, a year-on-year increase of 115.75%. In terms of AR-HUD technology routes, the TFT solution accounts for over 85%. From January to September 2023, the proportion of front-mounted W-HUDs exceeded 90%, and it is expected that by 2025, AR-HUDs may account for over 30% of the W/AR-HUD market.
It is projected that by 2025, the market size of HUDs in China will reach 10 billion yuan. According to forecasts from the High-Tech Automotive Research Institute, by 2025, the front-mounted delivery volume of HUDs in the Chinese market may exceed 5 million units. Considering both front-mounted and optional installations, the penetration rate of HUDs will reach 30%. Based on the Zosi Automotive Research report, it is expected that the actual shipment volume of HUDs in the Chinese market will reach 8 million units (including optional installations) by 2025. With an estimated 25 million passenger vehicles sold in 2025, the penetration rate is expected to reach 32%. As the W/AR-HUD industry chain matures and the localization rate increases, there will be significant room for cost reduction, and it is anticipated that AR-HUDs will enter the affordable price range in the coming years. Based on calculations from Ping An Securities, with a shipment volume of 8 million units and an AR-HUD proportion of 30%, the HUD market size in China is expected to reach 10 billion yuan by 2025, representing a growth of about 3.5 times compared to 2022, with a compound annual growth rate of 65%.
Consumer perception, maturity of the localized industry chain, and cost reduction by OEMs drive the growth of HUD demand. Consumers’ willingness to pay for smart cockpits is increasing, and HUDs can display more ADAS functions such as blind spot monitoring and reduce the need to look down to improve driving safety, making them one of the most perceptible modules in smart cockpits. Consumers’ acceptance of optional installations is also increasing. Advances in optical technology have reduced the size of HUD manufacturing while expanding the field of view (FOV). Localization has led to price reductions, and leading automotive brands’ installations have created a demonstration effect, allowing front-mounted HUDs to penetrate into mid- to low-range models. Since 2023, as more automotive brands adopt AR-HUDs, the scale of front-mounted AR-HUDs has rapidly increased, while the intense competition among automakers has led to cost-cutting demands from suppliers, resulting in rapid price reductions for HUDs and fierce price competition in the industry. The cost-effectiveness of W/AR-HUDs continues to improve, further driving rapid growth in HUD demand.
04. Competitive Landscape
The HUD market was previously monopolized by international enterprises. The advantages of international enterprises are mainly concentrated in the traditional W-HUD field, where they started early, have first-mover advantages, and possess the most critical imaging source technologies, dominating the global and domestic HUD markets in the early stages. In 2020, the market shares of Japanese Seiko, Continental AG from Germany, and Denso from Japan were 55%, 18%, and 16%, respectively, accounting for nearly 90% of the total market. According to data from the High-Tech Automotive Research Institute, in 2020, the market shares of Japanese Seiko, Continental AG, Denso, and Visteon in the domestic passenger vehicle HUD market were 33.3%, 27.0%, 20.1%, and 3.0%, respectively, totaling 83.3%. Taiwanese Yili Electronics, Jiangsu Zejing, and Huayang Group accounted for 9.1%, 3.6%, and 2.4%, respectively, as shown in the figure below.
Figure 4 Market Shares of Passenger Vehicle HUDs in China in 2020
Source: High-Tech Automotive Research Institute, Shenzhen Investment Industry Research Institute.
In recent years, the market landscape has changed rapidly, with domestic manufacturers overtaking international competitors and showing much stronger development momentum, with AR-HUDs taking the lead. According to data from the High-Tech Automotive Research Institute, in 2021, the top six suppliers in the Chinese W/AR-HUD market were Denso (39.4%), Huayang Group (16.2%), Yili Electronics (16.0%), Continental AG (11.1%), Japanese Seiko (9.3%), and Jiangsu Zejing (3.4%). The domestic company Huayang Group rose to second place, with its market share further increasing to 18.2% in 2022. As HUD products gradually penetrate from high-end to mid-range vehicles and the technological gap between domestic and foreign manufacturers narrows, domestic manufacturers are continuously increasing their market share due to cost advantages and the rising demand from local supply chains driven by the emergence of local brands. In the emerging AR-HUD field, domestic and foreign manufacturers are basically on the same starting line. With the rise of local brands and active technological innovations by domestic HUD manufacturers, domestic companies have completely positioned themselves in the first tier of the AR-HUD market. In the first nine months of 2023, among the suppliers of front-mounted W/AR-HUDs for domestic passenger vehicles, domestic manufacturers Huayang Group, Jiangsu Zejing, and Future Black Technology ranked in the top three, with a combined market share of 56%. The top three AR-HUD suppliers were all domestic companies, accounting for about 75% of the market share, with domestic manufacturers overall holding over 80% of the share. Besides domestic brands, joint venture brands like Dongfeng Honda, SAIC Volkswagen, BMW, and Audi have also begun collaborating with domestic suppliers, and the share of domestic suppliers is expected to continue to rise.
Figure 5 Market Shares of Front-mounted W/AR-HUDs in the Chinese Market from January to September 2023
Source: High-Tech Automotive Research Institute, Shenzhen Investment Industry Research Institute.
The representative enterprises in the HUD industry chain are listed in the table below.
Table 2 Major Enterprises in the HUD Industry Chain
Source: Shenzhen Investment Industry Research Institute.
About Shenzhen Investment Industry Research Institute
The Shenzhen Investment Industry Research Institute is a high-end think tank under the Shenzhen Investment Group, focusing on industrial development, serving regional economies, and committed to providing localized industrial development solutions for various governments and parks. Its main business includes industrial research, industrial planning, industrial chain investment strategies, project planning and packaging, and project evaluation. The research institute has a team of industry research experts with economic backgrounds from Peking University, Renmin University, Nankai University, and Sun Yat-sen University, who have long tracked and researched regional economies and strategic emerging industries, completing hundreds of planning consultations and industrial research projects for multiple regions including the Pearl River Delta, Yangtze River Delta, Haixi, Southwest, and Northwest.
