Toyota plans billion-dollar investment in ride-hailing startup Grab
Deal with Southeast Asian firm one of auto titan’s largest-ever investments outside core business
Toyota Motor Corp. will invest $1 billion in Southeast Asian ride-hailing firm Grab Inc., reflecting Chief Executive Akio Toyoda’s view that the company needs to expand beyond making cars to survive.
The investment, which values Grab at around $10 billion, is one of the largest by Toyota outside its own corporate group. Toyota said the Singaporebased startup has big growth potential in a region that is home to around 600 million people.
Grab has already forced Uber Technologies Inc. to retreat from Southeast Asia.
Toyota and Grab last year started a partnership in which they attached driving-data recorders to 100 Toyotas that are owned by the startup and rented out to potential Grab drivers. The recorders allow Grab and Toyota to develop services for the drivers, such as insurance with costs based on how the renter uses the vehicle.
A Toyota spokesman said the fleet could expand into the tens of thousands and could include cars from other makers. Grab has said it is aiming to build Southeast Asia’s largest fleet of rental cars by the end of the year.
Mr. Toyoda, the Toyota CEO, has warned that the company needs to find new sources of income beyond building and selling vehicles, calling it a matter of “surviving or dying.”
That belief is pushing a company known for its tight financial controls to spend big on yet-to-be proven technologies and businesses such as selfdriving and electric cars. Toyota has invested billions of dollars on self-driving research at its research centres across the world.
For Grab, the investment bolsters its position in its face-off with rival Go-Jek, which is gearing up to expand further into Southeast Asia.
Grab’s cash pile has been dwindling and it wanted to raise money, said a person with knowledge of the company’s finances.
A Grab spokeswoman said the company has raised about $5 billion to date, is well capitalized and has “a strong bench of long-term strategic partners and investors.”
Grab ousted Uber from the market in a March deal under which Uber sold its local operations to Grab in exchange for a minority stake in the homegrown champion.
Toyota’s driving-data recorders provide information that can be used to lower rental and insurance costs for drivers, said the Grab spokeswoman. That could help lure drivers in a turf war with Go-Jek.
An investment by Toyota allows Grab to maintain its independence, which has been a concern for the startup’s founders.
One person familiar with Grab management’s thinking said it has frowned on investment offers from large internet companies that might result in a loss of control.
Toyota will take a seat on Grab’s board and send an executive to work there, the Toyota spokesman said.