iPods are helping to drive increased demand for premium audio options in new cars. According to Telematics Research, 80% of 2007 models for sale in the U.S. will offer branded premium audio options from the likes of Bose and Harman/Kardon as optional or standard equipment up from 67% during the ’06 model year.

75% of ’07 vehicles will offer some support for digital content, such as MP3 and WMA compressed audio files, up from 61% of ’06 models.

The most sought after feature in cars is support for Apple’s iPod. Last year, only 12% of vehicles for sale supported true iPod integration, while nearly 50% of the ’07 models support iPods. Meanwhile, auxiliary input is supported by nearly 60% of ’07 models.

Only 5% of 2007 models support a flash memory interface in one form or another (about 17 vehicles in all). But the next generation of automotive audio systems promises to utilize more storage and interface options.

USB will gain considerable support as will hard disk drives. Last year, no cars sold in the U.S. offered a factory-installed hard disk, but for the ‘07 model year there are about six models that have factory-installed hard disk drives used for navigation and music server.

“The rapid adoption of available solutions from automotive OEMs is a stark contrast to the normal multi-year product development cycle in the automotive industry,” says Phil Magney, principal analyst with TRG. “The variety of solutions reflects the swiftly changing landscape of the mobile audio market where branded audio solutions, premium quality and device integration are driving market growth.”