(SCMP)— Toyota’s investment into Grab comes as carmakers continue to pour money into ride-hailing services around the world.Grab, the Singapore-based on-demand services firm, on Wednesday announced that Toyota Motor would invest US$1 billion into the company as a lead investor in its current fundraising round.
Under the agreement, the Japanese carmaker will collaborate with Grab in areas such as connected cars and other mobility solutions. The investment is the largest ever of its kind by an carmaker into the ride-hailing industry, according to Grab.
The investment comes as carmakers continue to pour money into ride-hailing services around the world, to help facilitate market share expansion by selling cars to ride-hailing firms or cooperate on connected car solutions as the future of mobility appears to shift away from private car ownership.
The fresh funds will allow Grab to further expand services such as its food delivery service GrabFood and mobile payments GrabPay to more countries across the region.
From its beginnings as a taxi-booking app – its original name is GrabTaxi – the company is morphing into an online platform for connecting users and offline services, and is venturing into financial services and venture capital.
“As a global leader in the automotive industry, Toyota’s investment in Grab is based on their conviction in our leadership in driving the adoption of new mobility solutions and expanding O2O mobile services, such as GrabFood and GrabPay, in the region,” Ming Maa, president of Grab, said in the release.
Ma estimated that Grab will reach over US$1 billion in revenue this year, as its users exceed 100 million in the region.
Grab will also work with Toyota on connected car services such as user-based insurance, financing programmes and predictive maintenance features for Grab’s drivers.
As part of the deal, a Toyota executive will be appointed to Grab’s board of directors and another Toyota employee will be seconded to Grab as an executive officer.
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Going forward, together with Grab, we will develop services that are more attractive, safe and secure for our customers in Southeast Asia”, Shigeki Tomoyama, Toyota executive vice-president, said in the release.
Currently, Grab counts carmakers Toyota, Honda and Hyundai among its investors, as well as Chinese ride-hailing giant Didi Chuxing. Grab recently took over Uber’s Southeast Asia operations after years of competition, and is currently going head-to-head in Indonesia with rival Go-jek. Go-jek is expected to expand its operations outside Indonesia this year in countries such as Singapore, the Philippines, Thailand and Vietnam.
This is not Toyota’s first foray into ride-hailing. The carmaker first invested an undisclosed amount in Grab in August last year, after it invested in US-based Uber in 2016 in a partnership for a financing programme that allowed Uber drivers to lease vehicles from Toyota and drive for Uber to cover the payments.
Toyota is also not the only carmaker eyeing the rapidly growing ride-hailing space. In 2016, General Motors invested US$500 million in Lyft, and Volkswagen also poured US$300 million into Israeli taxi app Gett in the same year.
Other carmakers such as Daimler, BMW and Ford have dabbled in investing and developing their own ride-hailing services.