BMW, Audi and Daimler agree to purchase HERE, Nokia’s mapping business

Thinking Highways
By Thinking Highways August 4, 2015 11:37

BMW, Audi and Daimler agree to purchase HERE, Nokia’s mapping business

Photo: Bloomberg News

BMW, Audi and Daimler will buy Nokia’s mapping business HERE for 2.8 billion euros ($3.1 billion) in a push to extend the reach of automakers into digital services for self-driving cars.

The three automakers will each hold an equal stake in HERE, which is one of the biggest vehicle-navigation suppliers, keeping it from falling into the hands of new rivals which are emerging from Silicon Valley.

“For the automotive industry this is the basis for new assistance systems and ultimately fully autonomous driving,” the companies said in a joint statement yesterday.

The deal underscores the German competitors’ push for self-driving systems independent of technology giants such as Google and Apple which are looking at entering the auto industry.

BMW, Audi and Daimler want to own the customer relationships that otherwise could shift to Google or Apple.

“With the joint acquisition of HERE, we want to secure the independence of this central service for all vehicle manufacturers, suppliers and customers in other industries,” Daimler CEO Dieter Zetsche said in the statement.

BMW CEO Harald Krueger said: “HERE will play a key role in the digital revolution of mobility, combining high definition maps and data from vehicles to make travel safer and easier for everyone.”

Intelligent mapping systems are the basis on which self-driving cars linked to wireless networks can perform intelligent functions such as recalculating a route if data about a traffic jam or an accident is transmitted to the car. In the future, such mapping systems will have a role to play in collision detection and other features of self-driving.

While there has previously been limited cooperation on auto parts, the joint acquisition on this scale involving BMW, Volkswagen Group’s Audi division and Mercedes-Benz owner Daimler is unprecedented.

The carmakers said HERE’s management will be independent and that the company will continue to make its maps available to all customers across industries.

HERE supplies map data for about 80 percent of cars with in-dash navigation systems in North America and Europe and also supplies Internet customers including Amazon, Yahoo and Baidu. It competes with Google and also with Dutch navigation firm TomTom.

It is unclear how other HERE customers, including rival carmakers, may respond to German automakers owning map technology, which many in the auto, Internet and logistics industries see as key to their own strategies. “There is a risk that the other automakers will be pushed further into the arms of Google,” said Richard Windsor an independent financial analyst who tracks major tech players.

Nokia is shedding the maps business to help it focus on integrating its 15.6 billion-euro purchase of Alcatel Lucent, a deal that will create the world’s second largest network equipment maker.

Supplying HERE’s technology to other automakers will enable the German partners to tap into a market for automotive data and connectivity that consulting company McKinsey & Co. estimates could surge sixfold from current levels to 180 billion euros by 2020.

Suitors for HERE included Chinese web services company Baidu, private-equity firm Apax Partners in cooperation with U.S. online car-booking provider Uber Technologies and Microsoft, according to people familiar with the matter.

The transaction is expected to be completed in the first quarter of next year. Nokia said it will get net proceeds on the sale of slightly more than 2.5 billion euros.

“This purchase shows carmakers are expecting huge new growth in autonomous driving and connectivity,” said Frank Biller, a Stuttgart, Germany-based analyst for LBBW. “They’ve all been cooperating with HERE for maps for a long time, so they know about the quality of the service.”

Story: Automotive News

Thinking Highways
By Thinking Highways August 4, 2015 11:37