Dutch navigation device maker TomTom has reached an agreement to supply PSA/Peugeot-Citroen with digital maps and other higher-margin services, as part of its effort to offset the dwindling consumer sales of its personal navigation devices (PNDs). According to TomTom, the supply agreement would result in having its maps, navigation and traffic services offered in up to 2.5 million Peugeot- and Citroen-brand cars annually, starting in 2015.
The supply deal came as PSA continued its loss-making ways, forcing it to make plans to lay off 8,000 employees and to close down a manufacturing plant. PSA posted a 13-percent drop in sales in the first half of 2012 to 1.62 million vehicles, as the carmaker’s share of the European market continues to be chipped away by rivals like Volkswagen and Hyundai-Kia.
TomTom, on the other hand, attributed the decline in sales of its PNDs to the increasing popularity of smartphones and free navigation software. The navigation device maker likewise faces stiff competition from rivals Garmin for the PND market and from Google and Nokia for the commercial digital map market. The news of the deal with PSA sent TomTom’s shares surging up 10.6 percent.