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March 08, 2014 12:00 AM

Automakers tap smartphone technology in battle over city cars

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    Opel's Adam Rocks will offer a system to connect to smartphones using Apple's iOS or Google's Android operating systems.

    FRANKFURT (Reuters) -- Carmakers are tapping smartphone technology to spruce up low-cost minicars and try to get an edge in a market that has grown to account for almost 10 percent of new-car sales in austerity-scarred Europe.

    The Opel Adam Rocks, Peugeot 108, Citroen C1 and Toyota Aygo, which all debuted at the Geneva auto show on March 4, are available with large multimedia screens that can display music libraries or navigation maps stored on a smartphone.

    Such features have already proven a big draw for customers in more upmarket models, and are now being added to a new breed of urban runabouts pitched at younger, tech-savvy drivers.

    "What used to be a feature seen in premium cars is now coming in to the low and medium end of the market," said Dinesh Paliwal, CEO of Harman International, a maker of so-called "infotainment" systems for the auto industry.

    "It's driven by a change in lifestyle where people no longer want to stop being connected just because they are in a car," Paliwal said.

    With sticker prices starting between 9,500 euros and 11,500 euros, minicars are proving popular among first-time buyers in Europe as the region emerges from a prolonged period of economic weakness.

    Researchers IHS Automotive forecast sales of A-segment (minicar) vehicles will rise by 11 percent between 2013 and 2017. But to succeed, analysts believe manufacturers will have to meet the growing expectation of young drivers to be able to access information and entertainment - or infotainment - from their smartphones.

    "Many first-time buyers are young, and these tend to be more tech savvy than other more traditional clients. Carmakers can't ignore this," said Andrew Poliak, director of automotive business development for QNX Software Systems, a software maker owned by mobile phone group BlackBerry.

    According to the International Data Corporation, smartphone shipments reached 1 billion and eclipsed sales of "standard" phones for the first time in 2013, accounting for 55.1 percent of overall mobile phone deliveries. As a result, Harman International expects sales of car infotainment systems to grow 14 percent between 2013 and 2016, compared with global passenger car sales growth of less than half that rate.

    Not all attempts to make cars more sophisticated have been a success, however. Ford Motor slipped in the quality rankings in the United States after its Sync infotainment system proved vulnerable to glitches.

    Connected cars

    Carmakers are not alone in driving the convergence between their industry and the technology sector.

    Apple unveiled a new CarPlay hands-free technology for car drivers, which will make its debut in Ferrari, Mercedes-Benz and Volvo vehicles. CarPlay will make it simpler for drivers to make calls, read maps and to listen to their music library using swipe gestures or voice activation, much in the way they are used to doing with an iPhone.

    "We are constantly developing the connected car with the latest technologies available, so that every Mercedes-Benz driver can use their smartphone in full comfort and safety," Thomas Weber, responsible for research and development at Mercedes-Benz, said of the deal with Apple.

    The makers of cheaper, smaller cars are striving to keep up.

    General Motors unit Opel unveiled the Adam Rocks in Geneva with its Intellilink infotainment system costing just 300 euros. Intellilink can connect to smartphones using Apple's iOS or Google's Android operating system to answer phonecalls and dictate text messages using a hands-free speaker.

    An Opel spokesman said the Intellilink system was already being ordered by 70 percent of European buyers of the standard Adam model.

    Mini, which is about to launch the fourth generation of its vehicle in March, said it expects more than a quarter of its cars to be equipped with the Mini Connected infotainment system, which is also compatible with Android and iOS software.

    Although many carmakers used Geneva to launch their latest products, some have gone to technology fairs as well. Last year, Ford boss Alan Mulally took the stage in Berlin at the IFA, Europe's biggest consumer electronics trade show, to present the U.S. company's "connected car" strategy. That was after General Motors' Steve Girsky did the same at the Mobile World Congress in Barcelona.

    The Consumer Electronics Show in Las Vegas (CES) in January was attended by a record number of automakers showing the latest in-vehicle navigation, entertainment and safety systems, including Toyota, Ford, GM, Audi and Hyundai.  Volkswagen CEO Martin Winterkorn will give the keynote speech at the CeBIT technology trade fair in Hanover, Germany, next week.

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