The BMW Service Indicator is the row of LEDs in the instrument panel. There are 5 LEDs colored green and 1 each red and yellow. The Service Indicator is designed to monitor the usage of the car and inform the driver of when service is needed. The Service Indicator takes information from the various sensors on the engine and vehicle, such as the engine speed, vehicle speed and coolant temperature, computes the way the car is being driven and decides when the next service is due. This method of service interval determination strikes the proper balance of driving style, vehicle longevity and economy with the need for service.
A vehicle that is driven mainly on the highway, at steady speeds will not need servicing as often as a vehicle driven on short, city style trips. To base oil changes and other services strictly on mileage or time does not take the variability of driving style into consideration. This can lead to servicing at too long of intervals, thus lessening the service life of the car, or at too short of intervals, leading to wasted money and lessening the economy of owning a BMW.
Too short of intervals will not hurt the car in any way, and it is recommended to increase the service intervals if severe conditions are encountered, such as towing, competition use, drivers schools or extreme weather, hot or cold. The standard of 3 months or 3000 miles for oil changes still isn't a bad idea.