BERLIN (Reuters) - Germany's Volkswagen (DE:VOWG_p) has picked navigation equipment maker TomTom to furnish its passenger cars with mapping technology, TomTom said on Tuesday, sending shares in the Dutch company sharply higher.
TomTom said VW will launch in-dashboard navigation systems with TomTom maps, starting with the new VW multimedia system in North America in the second quarter.
The technology will be rolled out across multiple car lines, TomTom said, including VW's two best-selling U.S. models, the Jetta and Passat.
Shares in TomTom jumped more than 8 percent at the market opening and at 1045 GMT were up 7.1 percent at 5.67 euros ($7).
TomTom said it had won the contract, one of its largest in recent years after a 2012 deal with Peugeot, from Nokia and would licence its maps for select Volkswagen brand cars in North America.
"It is a very important win in one of the most important car markets in the world," said spokeswoman Bisera Grubesic. "It also gives us new inroads with one of the largest auto manufacturers in the world."
Sales of VW brand cars in the United States fell 10 percent last year to 367,000 from 408,000 in 2013. The automaker aims to more than double its U.S. sales of VW brand cars to 800,000 by 2018.
Rabobank raised its price target for TomTom to 7.40 euros from 7 euros citing higher future sales.
"TomTom's recent partnerships with Volkswagen (driverless cars) and Bosch (advanced driver assistance systems) are clear proof points of TomTom's increasing relevance in the automotive industry," Rabobank said in a trading note.
Strong order intake should translate into double digit sales growth at TomTom Automotive from 2016 onwards, it said, putting TomTom "back on the radar screen of investors".
(Reporting by Andreas Cremer and Anthony Deutsch; editing by David Holmes and Jason Neely)