Dutch navigation system producer Tomtom has slumped to a steep second quarter loss as the market for personal navigation devices continues to deteriorate.

Consumers are increasingly using smartphones and free applications such as Google Maps to find their way around.

TomTom said it expects the PND market to shrink by 15% to 20% particularly as a result of a steep decline in the North American market.

The company warned in late June that 2011 sales and profit would fall short of expectations due to a faster than expected decline in the PND market. PNDs account for almost 50% of TomTom’s sales.

Chief executive Harold Goddijn told Dow Jones Newswires he was confident that the shrinking of the PND market will not accelerate further than estimated this year.

TomTom posted a net loss of EUR489m (US$703m) for the three months to the end of June, compared with a net profit of EUR34m (US$49m) a year ago. Second quarter sales fell 13% to EUR314m (US$451m) hit by a 23% drop in consumer revenue.

Sales from its automotive unit rose 34% to EUR60m (US$86m).The company said it still expects full year sales of between EUR1.23bn (US$1.77bn) and EUR1.28bn (US$1.84bn).