Toyota to Invest $1 Billion in Singapore-Based Ride-Hailing Company Grab

author: Paul Young   

Toyota is investing $1 billion in Singapore's Grab Holdings Inc., valuing Southeast Asia's largest ride-hailing service at just over $10 billion, according to a person familiar with the transaction. It follows an initial investment last year through Toyota's trading arm in the company that resulted in Uber shutting down its operations in the region.

The move is the latest example of tech companies and automakers investing in ride-hailing businesses, as as car ownership is expected to decline in the era of on-demand mobility.

Last year the investment arm of Alphabet invested $1 billion in Uber's biggest rival Lyft.

Just two weeks ago, Japan's Softbank Group announced a $2.25 billion investment in GM Cruise, the GM owned, self-driving startup building autonomous technology. Cruise is outfitting a fleet of self-driving Chevy Bolt EVs for a planned commercial ride-hailing service.

"This is a good decision, Toyota should not be late in this area," said Tatsuo Yoshida, an equities analyst at Sawakami Asset Management Inc. in Tokyo. "Ride sharing is coming. For car companies, this is a painful reality. But it can be a business opportunity if they understand it correctly."

Toyota, the world's most valuable carmaker with a market capitalization of about $221 billion, has sought partnerships with several major tech firms, including Amazon Inc. and Apple Inc. in a bet that big data will be a key part of its future.

Toyota also invested an undisclosed stake in Uber in 2016 and announcing a collaboration with China's Didi Chuxing in January.

As part of the deal announced Wednesday, a Toyota executive will be appointed to Grab's board. Toyota and Grab representatives declined to comment on Grab's valuation or the size of Toyota's stake. The investment is set to take place around the end of this month, Toyota said.

Grab said it logs six million rides a day via apps downloaded onto over 100 million mobile devices. The firm also offers online to offline services, such as food delivery and digital payments, which it aims to expand deeper into the region using funds from its latest financing round.

"We will work with partners like Toyota to continue to transform transportation in Southeast Asia," Grab said in an email. "We want to be the one-stop mobility platform for users."

Toyota's trading arm, Toyota Tsusho Corp., invested an undisclosed amount in Grab last summer. The companies have worked together since then, developing connected services. Toyota has installed its data recorders in Grab-operated rental cars to collect driving data.

Grab expanded its reach in Southeast Asia by buying out Uber's business in the region. However, Grab still faces fierce competition from Indonesian rival Go-Jek, which is expanding ride-hailing and other services in Southeast Asia.

"This investment isn't necessarily about making money, but about getting access to technology that fits in some place in Toyota's broader business," said Edwin Merner, the Tokyo-based president of Atlantis Investment Research Corp., which is invested in Toyota Tsusho. "If Toyota can build up knowledge on things like automated navigation, this is worth it. It's a kind of R&D."

Paul Young