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15 June 2018, 04:54 | Kelvin Horton
Singapore’s Grab gets US$1 billion from Toyota as Southeast Asia battle heats up
The Japanese company is pumping $1 billion into Singapore-based Grab - the biggest ever investment by a traditional automaker in a ride-hailing firm - the companies announced Wednesday.
"As a global leader in the automative industry, Toyota's investment in Grab is based on their conviction in our leadership in driving the adoption of new mobility solutions and expanding [online-to-offline] mobile services, such as GrabFood and GrabPay, in the region", said Ming Maa, Grab's president. It will work with Toyota on how connected auto services could help drivers on the Grab platform. It will also allow the company to deploy services like user-based insurance, according to CNBC'sreport.
Delivery service GrabFood was rolled out here last month. It is also available in regional markets, including Malaysia, the Philippines and Thailand.
Other services like financing programmes and maintenance could now be in the pipeline.
General Motors has invested in US ride services firm Lyft, whose rival Uber is also backed by Toyota. In fact, ride-sharing could make producing costly self-driving cars more economically viable.
"So in this way, the auto manufacturers are trying to find ways to compensate for a little bit of their lost revenues going forward", he added.
He said: "If you (car makers) don't own these firms which sell the mobility services and you rely on your old business model of selling cars directly to consumers, what happens when you wake up 20 years in the future and most people buy mobility services and individuals don't buy cars anymore?" The round will bring Grab's valuation up to $10 billion.
Heang Chhor, managing partner at Qualgro VC, said as much: "It's likely not a coincidence that Grab's announcement comes only a few weeks after Go-Jek's announcement to deploy US$500 million towards its expansion across South-east Asia".
Last month, Indonesian ride-hailing and online payment firm Go-Jek said it would enter Vietnam, Thailand, Singapore and the Philippines in the next few months, investing $500 million in its worldwide push. It follows an initial investment previous year through Toyota's trading arm in the company that forced Uber Technologies Inc. out of the region. The company said: "We are not disclosing our other investors at this point but are excited by the quality of investors who are interested in partnering with Grab". "If Toyota can build up knowledge on things like automated navigation, this is worth it".
"I think in this case, it is not just a pure investment where you want to just generate financial returns".
Toyota is also not the only carmaker eyeing the rapidly growing ride-hailing space. 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.
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