As navigation systems become more prevalent in vehicles and cars continue to add autonomous features, automotive manufacturers will have a greater need for accurate and precise maps in their cars. IHS Automotive, part of IHS, Inc. (NYSE: IHS) tracks this segment of the market closely and produces a global Infotainment Systems forecast which tracks infotainment headunit systems and applications such as navigation map suppliers, navigation routing suppliers, operating system providers and select hardware features on a model by model basis for companies that participate in this sector through 2021.
Globally there are two big players in the automotive mapping world - HERE and TomTom. Regionally, especially in the fragmented Asia markets, there are more. AutoNavi and NavInfo in China; Citus, Hyundai MnSoft, and SK Planet in South Korea; and Toyota Mapmaster and Zenrin in Japan. Excluding China, which limits foreign mapping activities, HERE and TomTom currently control the largest portion of the global automotive market.
In 2014 nearly 17M vehicles were produced with navigation systems, according to IHS. By 2021, that number increases to more than 25M.
The IHS Automotive Infotainment Systems Forecast estimates that, based on a detailed model by model assessment, HERE will generate revenue from automotive map licensing in excess of 600M Euros in 2015 (in excess of $660M USD), in addition to revenue from industries beyond automotive. The same forecast estimates that TomTom will generate approximately 64M Euros (approximately $71M USD) in revenue through automotive map licensing with automotive OEMs.
Even though there is a wide gap between these two companies, TomTom has been gaining ground on its primary competitor in recent years. In 2015, two major agreements with PSA and Volkswagen reached series production. At the same time, HERE was able to report a profit in a recent quarterly report for the first time in several years due in part to the growth of in-vehicle navigation.
According to the IHS Automotive Infotainment Systems Forecast, the Volkswagen Golf will lead in the inclusion of HERE maps, expected to be implemented in more than 173,000 vehicles in 2015. But it is not only small compact vehicles that are near the top for HERE, SUVs like the Nissan Qashqai and Honda CR-V and luxury models like the Mercedes-Benz E-Class are also near the top of the list for models that include HERE.
TomTom's top-produced vehicle with TomTom maps is the Peugeot 208 with more than 105,000 vehicles. In fact, French OEMs are the largest customers for TomTom, as they now also supply to both PSA and Renault.
Beyond today's technologies, both HERE and TomTom are positioning themselves to expand their automotive revenue streams as suppliers and OEMs seek out high-definition maps to support autonomous driving. Developing these maps requires significant investment; however, the reward is worth the risk given the implications that autonomous transportation has on the world's mobility ecosystem.
HERE has a head start as it has supplied electronic horizon maps to the industry for several years. These maps inform vehicles of upcoming topographical road features, while TomTom also offers such ADAS map data. Further, both HERE and TomTom have agreements in the industry to develop higher definition maps and incorporate them into autonomous vehicle systems.
Other companies outside of the automotive industry are showing interest in the area of high definition maps and autonomous driving. The most notable is Google, with research and development activities in autonomous driving, and their own mapping product. Google has much invested in this area to develop autonomous vehicles, including several test vehicles on the roads in California.
Uber is another company that is outside of the automotive industry, with significant interest in high definition mapping and autonomous vehicles. Uber recently purchased deCarta to not only support their current services but also their future plans too. Uber is also looking into developing an autonomous vehicle that would use its services.
It remains to be seen what exactly will happen with HERE after Nokia "initiated a review of strategic options, including a potential divestment, for its HERE business." This came after the announcement that HERE agreed to buy Alcatel-Lucent for $16.6B USD. There are plenty of potential suitors out there that are interested in HERE, and it is possible that Nokia decides to hold onto HERE. Whatever Nokia decides, HERE's recent profit, together with the massive interest in autonomous driving and growth of navigation systems in vehicles, shows that HERE has a bright future. TomTom also has a bright future as it gains market share with its new deals and also enters the foray into autonomous driving maps. It was only back in 2007/2008 when both Navteq and Tele Atlas were acquired; history could end up repeating itself having deals for both HERE and TomTom.
