Here’s why Asia’s auto giants want a piece of the ride-hailing pie

Grab CEO Anthony Tan (L) and Hyundai Group executive vice chairman Euisun Chung (R) / Photo credit: Grab

When Toyota joined as co-lead in Grab’s series H funding round in June 2018, it was said to be the largest-ever investment by an automotive manufacturer in the ride-hailing industry.

The Japanese carmaker’s US$1 billion capital injection was a follow-on to an earlier strategic investment in Grab, which was in the midst of raising US$2.5 billion from SoftBank and Didi Chuxing. At that time, it was touted as the largest VC round in Southeast Asian history.

While there have been other cases elsewhere in the world, such as GM’s US$500 million investment in Lyft in January 2016, Asia-Pacific manufacturers are pouring money into the region’s ride-hailing apps in an effort to widen their footprint in key growth markets, hedge for a “car-lite” future, and secure valuable data and tech insights, analysts say.

“Big Auto” boost

Toyota isn’t the only Asian Big Auto player to invest in Grab. And Grab’s archrival Gojek has also attracted funding from the auto sector.

Grab had said it would expand its existing collaboration with Toyota over connected cars “to drive the adoption of new mobility solutions across Southeast Asia.”

More specifically, the parties would together explore how Toyota’s Mobility Service Platform – which looks to integrate services such as insurance, financing, and predictive maintenance – could be rolled out to Grab drivers.

Honda and Yamaha’s strategic investments, on the other hand, are angled more at Grab’s two-wheeler services, with a particular focus on motorcycle safety, financing for drivers, and tech development.

Speaking at DealStreetAsia’s PE-VC Summit in Singapore this week, Grab co-founder Tan Hooi Ling said that investments from these original equipment manufacturers (OEMs) have helped her company get access to affordable vehicles that are fuel efficient and environmentally friendly.

Hyundai, for example, has leased several hundred electric vehicles (EVs) to Grab for use in its ride-hailing services, while Gojek and Indonesian car distributor Astra have set up a joint fleet of vehicles.

A Grab-branded electric Hyundai Ioniq car / Photo credit: Grab

Forward-looking

Will they make a return?