Someone HAS to make a head unit for this. Actually I kind of expect you'll be able to use an iPad like a head unit. And some mounting kits to install an iPad mini in the car..
I think that the product you are describing is likely the product Apple has in development...not an iWatch at all. All the rumors about some new "Phablet," sapphire glass, or iWatch make more sense in a third party product that would integrate with existing cars not specifically compatible with the models mentioned. An automobile is not something you "upgrade" like a phone every two years. Neither is a television.
I think you will see this product this year or at least an announcement of it. I think it will be part of an expansion of a new line of products for the Car and Home.
You won't see an iWatch. Ever. (Having said that, they'll probably make it though