TomTom Buys Out Minority Stake in India JV: Precursor of Big Things to Come?

In 2008 TomTom (AMS:TOM2) arrived in India via a joint venture that was initially a 60:30 partnership with an Indian firm named Kalyani. However in 2010, Kalyani withdrew from the venture and the stake was bought up by TomTom, increasing its share to 90 percent. The company just announced it now owns 100 percent of its operations in India, a sign that shows it’s confident of success in the country.

The move will allow TomTom more latitude in designing its India operations and introducing new products. Jocelyn Vigreux, TomTom’s managing director, voiced a similar opinion:

India has a large untapped car navigation market. By owning TomTom India Ltd 100 percent, we have full flexibility to execute our growth strategy. Our recent product introduction of the VIA series of our PND range is a great first step and we look forward to continue to develop bespoke products for the Indian market, like points of interest for landmark navigation.

With its growing middle-income population, India is surely an attractive market for TomTom. However, navigation products are still in their infancy due to relatively high prices. Another roadblock navigation companies have to face is charting the labyrinth-like road structure in India.

The Dutch company is also aware of the fact that the Indian market is not like European markets, where TomTom products rule the roost. In India, the company had to modify its operations and development to take into account local characteristics. For example, the big challenge was to provide directions for the places where the streets (quite literally) have no name.

Vigreux said that the company dealt with this problem by designing a landmark navigation system, which uses visible landmarks rather than the street names for identification purposes.

TomTom’s own journey in India is not going to be smooth either. The company is set to face competition from home-grown companies like MapMyIndia. TomTom is also going to have a tough time convincing price-conscious Indian consumers to buy its stand-alone products when most smartphones now come with in-built GPS functions. But despite these obstacles, TomTom seems to be positive about its India story as its managing director said, “We are also hiring aggressively. We will have 400 people by the end of this year.”

[Source: TomTom; TechCircle]