TomTom has reached an agreement to deliver maps to Volkswagen vehicles in North America starting in the second quarter.
The Dutch company said that Volkswagen will introduce in-dashboard navigation systems with TomTom maps starting with the new VW multimedia system during Q2, according to a company release.
The system will be introduced for a number of different car lines like Passat, Beetle and Jetta.
"We are delighted to announce this agreement with Volkswagen, strengthening our relationship with one of the world's premier car manufacturers, and reinforcing our global position as a trusted provider of automotive grade maps", said Harold Goddijn, CEO of TomTom in a press statement. "TomTom's real-time map-making technology ensures our customers will have the most up-to-date map on the market."
TomTom confirmed to Reuters that it won the contract from Nokia and would license its maps for specific Volkswagen brand cars in North America in the future.
Company shares jumped more than 8 percent at the market opening and at 10:45 a.m. they were up 7.1 percent at $7.
"It is a very important win in one of the most important car markets in the world," said spokeswoman Bisera Grubesic to Reuters. "It also gives us new inroads with one of the largest auto manufacturers in the world."
Sales of Volkswagen vehicles in the U.S. dropped 10 percent in 2014 to 367,000 from 408,000 the previous year. The company still expects to double its U.S. sales to 800,000 by 2018 despite the drop in sales.
Rabobank increased its price target for TomTom over higher future sales.
"TomTom's recent partnerships with Volkswagen (driverless cars) and Bosch (advanced driver assistance systems) are clear proof points of TomTom's increasing relevance in the automotive industry," Rabobank said in a trading note released on Tuesday to the media.
A number of analysts already believe that a strong order intake could translate into double digit sales growth for TomTom Automotive starting in 2016.
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