Tencent has a Plan for the Internet of Cars with the Newly Acquired Stake in NavInfo

State-owned China Survey has been authorized to sell 11.8% stake in mapping company NavInfo to Tencent for RMB1.173 billion ($189). Now Tencent is the second largest shareholder in the company.

Mark Ren, COO of Tencent, said at the press conference yesterday that the Chinese social giant will explore opportunities in the Internet of cars with NavInfo after the deal.

NavInfo will focus on map services pre-installed in cars while Tencent will work on software for car drivers to adopt, the two companies said.

Tencent and NavInfo will develop an open platform together for third parties. Tencent has developed an maps API for developers to build features on WeChat, the dominating mobile messaging app in China.

NavInfo claims it’s the largest maps provider in China and has 60% the market of pre-installed in-car mapping services. The clients of NavInfo include global car manufacturers including BMW, Volkswagen, General Motors, TOYOTA and Mercedes-Benz.

Previously Tencent Maps bought digital map data from AutoNavi, a competitor to NavInfo and who has been fully acquired by Alibaba. It’s not surprising Tencent suspended cooperation with AutoNavi and made investment in its competitor, for the Chinese online social company and Alibaba, known as an e-commerce company, now are in direct competitions in a lot of mobile sectors, such as m-commerce, gaming and mobile maps/navigation and online-to-offline service.

Alibaba and Tencent now both have free mobile maps and navigation apps. But a fiercer competition is expected to take place in online-to-offline business they both are working on, which needs location-based services supported by map data, locating capability and so on.

Both NavInfo and AutoNavi started with paid services for businesses and consumers; for instance, selling map data to car makers or navigation software to car drivers. After Internet companies entered into the mapping sector, especially after they launched quality navigation apps for free, they saw big decline in their businesses and revenues.

AutoNavi shifted focus to consumer-facing services earlier than NavInfo. AutoNavi announced to stop charging navigation products in August last year, later on the same day with Baidu who developed a similar app and decided to offer it for free. NavInfo finally decided to tap into consumer-facing sector last year.

A late version of its maps app, Amap, added a feature for sending messages from smart devices to car. Other than that I didn’t hear much about AutoNavi’s move on in-car connectivity. Since AutoNavi now is an Alibaba company, it’s understandable if AutoNavi would be focused on building a Taobao-like marketplace for physical stores as its management said in early 2013.