Toyota Plans Billion-Dollar Investment in Ride-Hailing Startup Grab

A man walks past a Grab office in Singapore

A man walks past a Grab office in Singapore

Toyota Motor (TM) will invest $1 billion in Grab Holdings, a Southeast Asian ride-hailing startup, as global automakers including General Motors (GM) and Ford Motor (F) brace for massive disruptions in mobility.

Toyota's trading arm invested an undisclosed sum in Grab previous year.

Last month, Toyoda pledged to transform the auto giant to meet a "once-in-a-century challenge".

"This is a good decision - Toyota should not be late in this area", said Tatsuo Yoshida, an equities analyst at Sawakami Asset Management Tokyo.

"If you think about all the increased car-sharing that we have. But it can be a business opportunity if they understand it correctly".

In a pilot scheme, Toyota installed its driving recorders in 100 Grab rental cars to collect data on vehicle and driving behaviour that is stored on Toyota's mobility services platform.

Announcing Toyota's stake Wednesday, Singapore-based Grab called the investment the largest ever by an automaker in the global ride-hailing sector.

In the cross-industry collaboration on those disruptive technologies, automakers bring two advantages: knowledge of how to build a vehicle and the factories to do it.

The two companies already had a relationship: Toyota's trading arm invested an undisclosed amount in Grab a year ago.

Toyota also has ties to Uber. The automaker is still discussing which executive to send to Grab's board, and is considering dispatching "a number" of Toyota employees to its partner, the spokeswoman said.

"A board seat nearly guarantees that Grab will buy cars from Toyota", said Steve Man, an analyst at Bloomberg Intelligence in Hong Kong. Grab has powerful backers though, including Uber, Didi and Softbank Group, the Japanese tech giant run by Masayoshi Son that has invested billions of dollars in automation and artificial intelligence companies, including GM's Cruise autonomous-car unit.

A Toyota Group company already invested an undisclosed amount in Grab past year, and the companies have worked together since August developing connected services.

To be sure, no partnership in the vehicle industry is a guaranteed success. Toyota's relationship with Tesla unraveled after four years amid culture clashes and recalls.

The company's valuation had been $6 billion but, unsurprisingly since the Uber deal, it has jumped by a further $4 billion based on Toyota's investment. Hyundai and Honda have also made strategic investments in Grab; Grab also has a network of mobility partnerships with companies such as, Baidu and nuTonomy.

"I am delighted that we are strengthening our collaboration, which utilizes Toyota's connected technologies, with Grab, Southeast Asia's leading ride-hailing company".

Toyota Motor officially going beyond just making cars.

Toyota is worth north of US$200 billion.

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