Honda Motor (HMC - Get Report) will partner with Alibaba Group (BABA - Get Report) to develop services for connected cars as global automakers partner with Chinese internet companies to cater to local needs of consumers in the world's biggest auto market.

Japan's third-largest automaker will work with AutoNavi, the mapping and navigation company acquired by Alibaba in 2014, the Nikkei reported, without saying where it got the information. Alibaba had no immediate comment on the report, while a representative for Honda said the two companies have been working together since 2015.

The operating system for connected cars is seen as the next battleground for both internet companies and automakers. At stake is the time - and potential spending power - of a captive audience of vehicle occupants, especially if autonomous driving frees up their time and attention to be able to consumer more digital services while on the road. 

The total market size for connected vehicles will more than double to US$10.5 billion by 2021 from last year, according to IDC, the industry researcher.

Landing Honda as a partner would help Alibaba extend its connected-cars business, which it kick-started in 2016 with an internet-connected car with China's biggest automaker, SAIC Motor. Alibaba's YunOS would compete with platforms such as Apple's (AAPL - Get Report) CarPlay and Google's (GOOGL - Get Report) Android Auto in delivering a suite of services from music to navigation for in-vehicle use. Tencent Holdings (TCEHY) and Guangzhou Auto agreed to collaborate on internet-connected cars, while Baidu (BIDU - Get Report) is working with Hyundai to develop similar technology. 

Alibaba owns the South China Morning Post.

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