Dutch navigation firm TomTom said on Tuesday it had lost a contract with automaker Volvo. The company said the contract to provide location and navigation services to Volvo, which was announced in 2016, had been ended before it was due to go into force in 2019. That fed into concerns of critics who said a deal Google made last month with Renault, another TomTom customer, meant the company risked being relegated to third place in its main market, with lower margins.
Volvo could not immediately be reached for comment on the contract. ING analysts said in a trading note that they believe the Swedish automaker had switched to Google, rather than the current leading player in the navigation market, HERE.
“Now that Google is making inroads, the mapping business has become a three-player market with TomTom, HERE and Google, which is clearly less attractive for TomTom than the two-player market it was before,” they said.
TomTom shares lost a quarter of their value in one day on Sept. 18 after Google announced a far-reaching supply deal with a group of automakers including Renault, Nissan and Mitsubishi.
Though the Volvo news knocked shares lower, TomTom reported better than expected third-quarter results on Tuesday, with core earnings rising to €62.4 million euro ($72.2 million) from $41.1 million a year earlier.
Group sales were slightly higher at $254 million euros, from $253 million in the third quarter of 2017.
While sales of the company’s traditional satellite navigation devices continued to fall, that was offset by sales to automakers and map licensing to customers Apple and Uber. The company also raised its full-year revenue outlook to $984 million from $955 million.
TomTom this month announced plans to sell its fleet management business, saying it would instead focus its energy on making digital maps used in highly automated driving — the business on which it has pinned its future.
It said it has seen “strong interest” for the fleet subsidiary, valued at roughly $810 million.
Harold Goddijn, CEO and co-founder, said recent new deals with PSA Group and BMW showed the viability of the company’s products.
