BMW's use of augmented reality a sign that manufacturers will go directly to market, says expert

Specialist in manufacturing contracts and connected cars Ben Gardner of Pinsent Masons, the law firm behind Out-Law.com, said we are likely to see an increasing number of manufacturers cut out retailers and other 'middle men' in the sales process in 2017 in an effort to protect their profit margin.

"Although BMW envisages vehicles continuing to be sold through its dealership network for the time being, this demonstrates the innovative ways in which manufacturers and retailers are hoping to interact with end consumers," Gardner said. "Interestingly, we could eventually see BMW or another car manufacturer beginning to sell vehicles directly to consumers instead of through dealers and retailers by utilising the latest sales and e-commerce technologies."

"This is a trend that is likely to continue across a number of different sectors as costs of production increase and further pressure is put on the margins. However, manufacturers should be aware of the new legal issues which may emerge when transitioning from business-to-business to business-to-consumer distribution channels. This includes the need to comply with a myriad of consumer protection laws which place more onerous obligations on the quality of the product and its fitness for a particular purpose, and the ability for it to be returned by the consumer if they change their mind," he said.

Gardner was commenting after BMW announced at major consumer electronics and technology trade show CES 2017 that they would allow customers the opportunity to virtually explore their i3 or i8 vehicle models in real-size in a new pilot scheme.

Customers will be able to visualise the cars using Tango, Google’s smartphone augmented reality technology. BMW said it intends to make the app available to customers to download once the pilot scheme is "successfully completed".

Andrea Castronovo, BMW Group vice president of sales strategy and future retail, said: "In situations where the desired product isn’t available on the spot, this visualisation is the next best thing. In our initial tests, we saw people ducking down when they were getting into the car, as if there really were a roof there for them to bang their heads on. It’s that level of detail which means this technology offers the customers real added value."

Eric Johnsen, head of business development for augmented reality at Google, said the technology giant believes most "premium Android devices will be Tango-enabled" in the next couple of years.

"The thing that sets Tango apart is the fact that it understands the context of the space that it’s in," Johnsen said. "So the wheels are really on the floor, for example, giving the whole experience a much more realistic feel. Augmented reality has such huge potential for retail, we’re just getting started."

Whilst the technology will be heavily used by the retail sector, it also has huge potential for manufacturers looking to sell their products directly to consumers, Gardner said.