A big bet has been placed by Toyota on the largest Southeast Asia ride-hailing company. The automaker based in Japan is investing $1 billion into Grab, which is based in Singapore. The investment is the largest ever by a traditional carmaker in a ride-hailing company, the two companies announced on Wednesday.
The funding was based on Grab having a value of slightly more than $10 billion, said someone close to the situation.
Grab was in the headlines last March when it bought out Uber’s Southeast Asia business in a deal worth billions.
Under the just announced agreement, one of Toyota’s executives is to join the board of directors at Grab and an employee of Toyota will become an executive officer in Grab.
Toyota will share technology with the ride-hailing company including its software that predicts when vehicles need maintenance.
A relationship already existed between the two companies as the trading arm of Toyota invested in Grab during 2017 an undisclosed sum.
The investment of $1 billion by the carmaker is part of Grab’s broader round of fundraising. Grab said it would use this money to expand its mobile payment platform and food delivery service across Southeast Asia.
Toyota has ties with Uber as well. The carmaker invested in the U.S. based company during 2016 but the amount of the investment was not disclosed.
Other automakers have made investments in ride-hailing companies as well. General Motors invested $500 million in 2016 in Lyft, Germany based Volkswagen injected $300 million in Gett, and Japan based Honda made an investment of which the amount was not disclosed in Grab. Hyundai, earlier in 2018 invested with Grab as well.
The ride-hailing industry worldwide has experienced explosive growth and the increased interest in autonomous vehicles pose very serious challenges to the world’s automakers. It is not enough any longer to design, make and sell vehicles, according to one report in May by a consulting firm in the industry.
Auto companies must partner as well as invest in startups in the ride-hailing industry as well as other service providers in an attempt to capture a share of the growing pool of profit to offset the slowdown in growth of car sales, said that report, which was focused on China, the largest auto market in the world.