TOYOTA SPLURGE
The world’s most profitable carmaker is investing $1bn in Singapore’s Grab.
TOKYO/SINGAPORE: Toyota Motor Corp is making the largest ever bet by an automaker on ride hailing as it embraces new businesses that threaten to disrupt the industry’s traditional model of vehicle ownership.
The world’s most profitable car manufacturer is investing $1 billion in Singapore’s Grab Holdings Inc, valuing Southeast Asia’s largest car-hailing firm at just over $10 billion, according to a person familiar with the transaction.
It follows an initial investment last year through Toyota’s trading arm in the company that forced Uber Technologies Inc out of the region.
Toyota’s outlay in Grab is double the size of General Motors Co’s investment in Lyft Inc in 2016, underscoring the sense of urgency president Akio Toyoda has in shifting the company toward mobility services.
The 81-year-old automaker, founded by Toyoda’s grandfather, is preparing for intensifying competition from peers as well as technology giants as the industry transforms.
“This is a good decision — Toyota should not be late in this area,” said Tatsuo Yoshida, an equities analyst at Sawakami Asset Management Inc in Tokyo. “Ride sharing is coming. For car companies, this is a painful reality. But it can be a business opportunity if they understand it correctly.”
Carmakers and technology companies alike are working toward a future where autonomous robo-taxis will lessen the need for individual car ownership.
Toyoda — due to face shareholder questions at an annual meeting in Toyota City today — is putting in the money after GM’s Cruise autonomous-car unit won a $2.25 billion investment from billionaire Masayoshi Son’s SoftBank Group Corp.
Carmakers are seeking to strengthen their tech expertise as new rivals such as Waymo and Tesla Inc threaten to redefine the auto industry.
In the cross-industry collaboration on those disruptive technologies, automakers bring two advantages: knowledge of how to build a car and the factories to do it. What they lack is the legions of software engineers at the disposal of tech companies in Silicon Valley and Shanghai.
Toyota, the world’s most valuable carmaker with a market capitalisation of about $221 billion, has sought partnerships with a pantheon of tech companies including Amazon Inc and Apple Inc in a bet that data
will be a key part of its future.
Toyota has also partnered with ridehailing companies beyond Grab, taking an undisclosed stake in Uber in 2016 and announcing a collaboration with China’s Didi Chuxing in January.
It has also backed Japan Taxi, an Uber rival run by the chairman of Tokyo’s biggest taxi operator.
Toyota had about $54 billion in cash, equivalents and short-term investments as of March 31 — giving it firepower for deal-making.
As part of the pact announced yesterday, a Toyota executive will be appointed to Grab’s board.
Toyota and Grab representatives declined to comment on Grab’s valuation or the size of Toyota’s stake.
“A board seat almost guarantees that Grab will buy cars from Toyota,” said Steve Man, a Hong Kong-based analyst at Bloomberg Intelligence.
“The $1 billion that Toyota is paying for a stake is not a high price for selling more cars and whatever other self-driving technologies.”
Toyota’s trading arm, Toyota Tsusho Corp, invested an undisclosed amount in August, and the companies have worked together since then, developing connected services.
Toyota has installed its data recorders in Grab-operated rental cars to collect driving data — a strategy similar to the one it has employed at Japan Taxi.
“Toyota and Grab are exchanging information on autonomous driving, but no decision has been made on collaboration in that area,’’ a Toyota spokeswoman said.
“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.
At about $10 billion, Grab is still a relatively small player. Uber was valued at $62 billion in a stock deal announced in May, and Didi Chuxing was valued at $56 billion after a fundraising round in December.
Six-year-old Grab has powerful backers though, including Uber, Didi and Son’s SoftBank.