Germany's luxury automakers buy Nokia's maps

By MoneyTimes

Aug 04, 2015 04:02 AM EDT

Nokia bids goodbye to its digital maps business as it sells its HERE maps unit to German carmaker consortium among BMW, Audi, and Mercedes-Benz's owner Daimler, to focus on making mobile-phone network equipment.

The trio, which agreed to pay Nokia €2.8 billion or $3.07 billion, will have an equal stake in HERE. The transaction is expected to close in the first quarter of 2016.

"High-precision digital maps are a crucial component of the mobility of the future. 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 Chairman Dieter Zetsche said in a statement.

This is the first time that the world's three biggest luxury carmakers are teaming up to become service providers.

The premium automakers were purportedly worried about the possibility of HERE falling into the hands of Google, Apple, or Uber.

Uber was among the German consortium's competitors in the auction process, which began after Nokia agreed last April to buy French competitor Alcatel-Lucent. In purchasing Alcatel-Lucent, the Finnish company aims to form the world's second-largest network equipment maker.

BMW, Audi, and Daimler have been making use of HERE maps. With the service now fully under their control, the trio hopes to offer differentiated and brand-specific services, luring customers away from their high-tech rivals.

"This purchase shows carmakers are expecting huge new growth in autonomous driving and connectivity," Frank Biller, an analyst for LBBW, told Bloomberg.

Bloomberg reports the market for auto mapping solutions could surge sixfold to €180 billion ($197 billion) in five years' time.

The trio will reportedly invite other automakers including Ford, Toyota, and General Motors to invest in the mapping service.

In the future, real-time maps and location-based services will be the basis for autonomous driving, and with Google testing its own self-driving cars, smart vehicles are seen as the next big thing in the auto industry.

About 80% of cars with in-dash navigation systems in North America and Europe are using HERE maps, which are accurate to within as few as four inches.

HERE, previously named Nokia Maps, is cloud-based and accessible across multiple operating systems and devices.

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