The rise of Portable Media Players (PMPs) and downloadable content is forcing car makers to rethink automotive onboard entertainment by adding connectivity to what have traditionally been standalone audio and video systems, new research shows.

Consumer demand for traditional in-vehicle infotainment systems such as CD players is declining in favor of products that support downloadable content, such as Apple Inc.’s iPod, research firm iSuppli said on Wednesday.

The easiest way automakers can meet this demand, iSuppli believes, is to use connectivity as a means to bridge the gap between cars and such new-generation consumer-electronics products.

These connectivity gateways are set to generate major market for both consumer electronics manufacturers and the automotive industry, while giving consumers what they have been demanding from their automotive infotainment systems.

Many newly-enabled technologies in automotive infotainment will be driven by opportunities created by silicon suppliers,” said Richard Robinson, principal analyst for automotive electronics at iSuppli. These suppliers will see their revenue expand to nearly $7 billion by 2012, up from $4.1 billion in 2006, and that’s a huge growth opportunity.

Fueled by the desire for connectivity, as well as for the support of new delivery formats, the overall automotive infotainment market will grow to $53.8 billion in 2012, achieving a Compound Annual Growth Rate (CAGR) of 7 percent from $38.3 billion in 2006, iSuppli predicts.