Toyota Motor Corp has announced that it is pumping in $1 billion investment into Grab. This is South East’s Asia leading ride-hailing company. The deal stands as the largest investment by a traditional auto-maker in a ride-hailing company so far.
Toyota decided to invest in the Singapore-based company so as to tighten the ongoing partnership to grow the transport services in the region. According to someone who is privy to the deal, the investment injected by Toyota raises Grab’s value to over $10 billion.
The companies have agreed that an executive from the Japanese automaker will join the ride-hailing firm’s board. In addition, an employee from Toyota will join Grab as a full-time executive officer. Toyota also agreed that it would freely share technology with the Singapore-based firm. That includes among others, a technology that will warn when cars need maintenance in advance.
Grab seems determined to grow and maintain its leading position in the South East Asia region. In late March it struck a deal with Uber to buy it. The U.S company exited the market leaving both its services, ride-hailing and Uber Eats. Uber did not receive any cash amount in the deal, however, it got a 27.5% stake in Grab.
In addition to offering, motorbike services, carpooling, and cashless payment services, Grab operates in 191 cities in the region which was about three times as many as cities as Uber operated in. Uber had been trying to compete with Grab in eight fast-growing markets. Markets such as Singapore, Thailand, Indonesia, Malaysia, Myanmar, Philippines, Vietnam, and Cambodia.
Not The First Deal
This is not the first time that Toyota and Grab will be working together. Last year, the Japanese automaker through its trading arm, Toyota Tsusho Corp, invested an undisclosed amount in Grab to provide services in the region.
Grab has been trying to raise money to fund its growth. It stated that the $1 billion investment from Toyota would be channeled towards expanding its food delivery service and mobile payment platform across the region.
Initially, the Japanese automaker was cautious about ride-sharing and autonomous driving technology. However, it seems to be warming up to the idea. In recent years it seems to have been playing catch-up. It has been signing on partners, for example, in 2016, it invested an undisclosed sum in the U.S firm Uber.
The growing trend in the ride-hailing industry has forced car companies to partner and invest in ride-hailing start-ups in order to reap from the growing industry.