Connected car capabilities — convenience, entertainment and safety — rather than on-the-road performance can make or break showroom deals for some prospective buyers, the global head of sales and brand at Bayerische Motoren Werke AG told S&P Global Market Intelligence in an interview.
Vehicles equipped with internet access routed through mobile phones via Bluetooth offer a potentially vast range of functionalities beyond audio playing and navigation. Such features can save time and boost productivity and even help to lower drivers' stress with features such as aromatherapy to kick in when vital signs, detected through wristwatches, flag tension or fatigue.
"Customers expect their world to be integrated with their car," Pieter Nota said during an interview at the Paris motor show, which runs until Oct. 14.
"There is a lot of evidence that purchase criteria are shifting. In China, we know that 60% of people would switch between brands when there is an alternative that offered more connectivity," Nota said.
With car sharing expected to supplant car ownership, among city dwellers at least, and as electric cars do away with thousands of components found in conventional cars, denting automaker revenues in the process, developing wireless services and applications that motorists are willing to pay for is set to become a new income stream for the industry.
While BMW's Nota had no figure to offer on the value of connectivity at this early stage, Volkswagen AG has said it could generate annual income in the billions of euros.
"We are transitioning from a hardware company in the past to a tech hardware and software company, and customers are going along with that," Nota said.
With more experience in pistons than programs, automakers are focusing on acquisitions and joint ventures in the IT sector to acquire these capabilities. On Oct. 8, for example, BMW announced the formation of a joint venture with Portuguese company Critical Software to combine both partners' expertise in mobility and automotive software engineering to develop applications.
Beyond the more obvious features, such as an ability to access digital music collections and communicate with contacts hands-free, more recent developments in BMW's connected capabilities include "spare" digital keys that allow owners to lend their cars to others and grant access via mobile phones. There are also PC-like functions such as touchscreen access to Microsoft Corp.'s Office when the car is stationary.
Nota said BMW will explore making available for sale wireless software updates that add functionality to cars or even improve aspects of performance, similar to how electric-car maker Tesla Inc. has upgraded brakes on some of its vehicles with an over-the-air software update.
BMW will devise a new contractual relationship with its dealer network to provide dealerships with incentives to sell digitally supplied services, Nota said, adding that 3 million BMW customers already have some connected car capabilities and features.