Young consumers drive sharing trend
lack of environmental policy linking CO2 reduction with the transport sector.
The think tank sees a shift in consumer perception on car ownership in some countries, especially among Gen Y consumers, but this trend is not yet evident in Thailand.
According to a 2017 survey conducted by SCBEIC, car ownership ranked as the top acquisition wish among Thai first-time workers. However, consumer preferences may shift once ride-sharing and delivery services such as Grab and Line become more convenient and ubiquitous.
In the short term, SCBEIC believes Grab will cement its market-leading position in Thailand with investment capital from Toyota.
Toyota could benefit from the stream of data from ride-hailing service drivers, supporting new business ventures. In particular, autonomous driving requires a large amount of data for learning, while insurance businesses under the mobility-service platform could also use the data.
Nantapong Pantaweesak, an SCBEIC analyst, wrote an article titled “Readiness Check for Car-sharing Businesses” noting that transport options, such as taxis, motorcycle taxis and ride-hailing services, are more competitive because of higher flexibility in both the process of acquiring a ride and parking, as these services come with a driver.
The government’s taxi price regulations work against car-sharing businesses and are not conducive to competition in the transport market, contrary to countries with strong car-sharing businesses such as Europe and the US, Mr Nantapong said.
Car-sharing fees for travelling less than 10 kilometres for 30 minutes or less are 10-20 baht higher than those of taxis.
Though taxi fees are much higher in Europe and the US, their governments provide incentives for people to use carsharing services instead of using personal cars to support environmental policy goals.
Motoki Yanase, vice-president for the corporate finance group at Moody’s Japan, said Toyota’s investment in Grab is creditpositive for both parties.
The deal will enhance Toyota’s foothold and capability in ride-hailing services, a fast-growing business that could alter automakers’ traditional business models. Grab will in turn benefit from Toyota’s technological capability.
Toyota’s driving recorder, which collects driving data and stores it in a central platform, will expand connectivity among Grab’s rental car fleet across Southeast Asia. This data will help the two companies roll out new services for drivers, including automotive insurance, auto leasing and vehicle maintenance.
This collaboration complements Toyota’s existing alliances with global ride-hailing providers, including Uber Technologies Inc and JapanTaxi Co, an app-based provider in Japan. Grab has strengthened its leading position in Southeast Asia after acquiring Uber’s assets in the region in March.
Led by young users, ride-hailing services have gained popularity in Southeast Asia.
“Toyota is poised to benefit from its growing presence in this business because new car sales in the region could fall amid changing consumer preferences and increasing acceptance of the app-enabled sharing economy,” Mr Yanase said. “We estimate that Toyota has more than a 25% market share and a leading position in Southeast Asia, making it an important market for the company.”
For Toyota, the $1-billion investment is small relative to its annual cash flow from operations for the automotive business, which Moody’s estimated to exceed ¥2.5 trillion (748 billion baht) for fiscal 2018, which ended in March.
Toyota first invested an unspecified amount in Grab in 2017 through its trading company, Toyota Tsusho Corporation.
Realising the lucrative potential, other Japanese companies have also begun to invest in ride-hailing service providers.
Honda Motor Co invested an undisclosed amount in Grab in December 2016 for motorcycle-sharing services in Southeast Asia, while SoftBank Group Corporation has invested in Uber, Grab, Chinese ride-hailing service provider Didi Chuxing and Indian ride-hailing company Ola Cabs.
TECHNOLOGY KEY
Despite a healthy market in Thailand’s property sector, large developers have adjusted before being disrupted, said Apichart Chutrakul, chief executive of SETlisted developer Sansiri Plc.
“The property business model is changing,” he said. “In the future, artificial intelligence [AI] may analyse land plots and tell us what kind of property would derive the maximum benefit. If developers do not change [their business models], they will be unable to keep up with others.”
Late last year, Sansiri joined six diverse companies to cooperate on technology and lifestyle after partnering with BTS Group Holdings Plc and Japanese railway operator Tokyo Corporation for condominium development.
Atip Bijanonda, president of the Housing Business Association, said developers’ partnerships with non-property businesses like technology or energy savings are a marketing tool to attract homebuyers.
“Developers find new marketing gimmicks as a new sales point,” Mr Atip said. “But this does not mean [property] projects without [partners] will not be able to sell their units. Homebuyers still consider fundamental factors when buying a house.”
Those factors include location, price and overall value. Marketing gimmicks are not the key factor in homebuyers making a decision, he said, citing solar rooftops, which add development cost to the housing price.
Ultimately, all market segments need to adopt technology or non-property partners to increase the value of their products and meet consumer preferences, though their behaviour changes rapidly, Mr Atip said.
Tachaphol Kanjanakul, governor of the National Housing Authority, said technology plays a key role in residential development in all segments and is not confined to specific markets as in the past.
“We are adopting technology to improve the residential quality of units in the lowerto middle-income segment as well as for seniors,” Mr Tachaphol said. “We have partnered with CAT Telecom to study and develop smart homes as part of the government’s 4.0 policy.”
Krating Poonpol, managing partner of 500 TukTuks, the local arm of the US-based venture capital firm, said that having large corporations invest in its fund helps not only with fund-raising, but also allows such large firms to connect to their customers and offer domain expertise.
Distributing equal risk factors is another advantage of such business partnerships, Mr Krating said.
500 TukTuks’ two funds have at least 10 corporate partners who operate in the retail, fast-moving consumer goods, logistics, media, IT, energy and industrial sectors.
Sumet Ongkittikul, research director for transport and logistics policy at the Thailand Development Research Institute, said the sharing economy for logistics and delivery services is still emerging because usage remains limited.
Online delivery services such as food delivery are quite popular among urban dwellers because of the convenience and traffic jams, Mr Sumet said. But the service is mostly limited to millennials and the fare paid by distance is not cheap, he said.
When logistics efficiency is enhanced, these platform providers will have the power to control the price, Mr Sumet said.
As for online taxi and car-booking services, they are unlikely to become widespread quickly because there are many traditional taxis in Bangkok and hailing them remains convenient, he said. They provide a more useful service in locations where it’s hard to access traditional taxis.
PAST IS PROLOGUE
In the financial industry, the concept of a sharing economy has been implemented over three decades among financial institutions. ATM pools and electronic data capture (EDC) pools are classic examples of a sharing economy here.
When ATMs were first introduced in Thailand, cardholders were only allowed to withdraw cash from machines owned by the issuing bank. ATM cardholders of Bank A could not withdraw money from Banks B or C, while credit card holders of Bank C could not make credit card payments at a superstore if it did not have an EDC machine from Bank C.
Banks made lavish investments to set up huge ATM and EDC networks to serve their customers, but that ended when the Thai Bankers’ Association initiated an ATM pool, followed by an EDC pool, allowing smaller banks to share ATM transaction expenses with larger players.
“The basic idea of a sharing economy is to reduce financial costs and time spent for all participants,” said Peainkrai Asawapoka, president of JP Insurance Public Co and executive director of the Thai Fintech Association. “One group owns an asset that is not used for a period, while another group does not own the asset but wants to use it for a period.
“Technology helps i n three ways: reduced cost, i ncreased speed and increased efficiency.”
For its part, the insurance industry is discussing implementation of a sharing economy such as sharing resources for accident claims, Mr Peainkrai said.
At present, when an accident occurs, car owners must wait for insurance employees to finish the claim for both parties. In the future, if insurance companies can pool a claim resource, the claim might be processed via a surveyor or anyone who is nearest to the accident and can use an integrated system.
This is akin to folks with ATM cards that can withdraw money from any ATM machine, no matter the bank that owns the machine, Mr Peainkrai said.
‘‘ Technology helps in three ways: reduced cost, increased speed and increased efficiency.
PEAINKRAI ASAWAPOKA Executive director, Thai Fintech Association