"A solid win for TomTom"
BMW Traffic win important albeit revenue is modest
The facts:
TomTom has just announced that it has won BMW as a client for its traffic solution. TomTom will be providing BMW’s across the whole line-up with Traffic as part of the Connected Drive offer on BMW in Russia, Australia and New Zealand.
Our analysis:
Although the revenue contribution from this contract will be very modest (around EUR 1m in high margin service revenue), it is nonetheless an important win. BMW used to be an almost 100% Inrix account, one of TomTom’s key competitors in the automotive space. Inrix currently provides BMW with traffic in Europe and traffic and parking info in North America, meaning it will be difficult to replace in these key markets. With this win in Russia and Oceania, at least TomTom has gotten its foot in the door, allowing BMW to see the difference between the TomTom offering and that of Inrix outside of a factory test.
Our revenue assumption is based on 35k unit sales in Russia (used to be around 40k) and 25k for Oceania, a 70% take rate on ConnectedDrive and a EUR 25 fee for the initial 3 years.
Tom now provides Traffic to BMW, Daimler and Audi as well as other brands such as VW, Fiat Chrysler, Kia, Renault, PSA Citroen and Toyota Europe. It is clear market leader in Europe but is less strong in Asia and North America.
Conclusion & Action:
A solid win for TomTom in a competitive market from an OEM that is known for opting for the best quality. The revenue impact is limited but it shows that TomTom has the required quality, which is always positive from a marketing perspective.