Toyota’s $1 billion investment in Southeast Asia’s largest ride-hailing company Grab is a move to form “an alliance of strength” by boosting their collaboration in the region, Nomura said in a note on Wednesday.
“We see limited uptake of autonomous driving technology in emerging markets such as Southeast Asia and India, even by 2030, owing to low labor costs for drivers, relatively underdeveloped road infrastructure, and poor compliance with traffic regulations. Under these circumstances, existing ride-hailing and taxi service majors such as Grab are likely to benefit from market growth,” it said.
Nomura added that Toyota has around 40 percent of new auto sales in Southeast Asia’s markets, and can combine its mobility services platform data infrastructure with other businesses such as dealer maintenance, vehicle development and production as well as sales financing.
“We thus see this collaboration as an alliance of strength,” Nomura said.
It noted that since August, the two companies have been developing connected services for Grab by using driving data collected by Toyota’s driving recorder. The two companies have also already been providing driving data-based auto insurance through local insurance companies, it noted.
“The deal is aimed at achieving connectivity for Grab’s fleet across Southeast Asia, and at rolling out insurance, driver financial services, and
maintenance services that utilize vehicle data stored on Toyota’s MSPF [mobility services platform],” Nomura said. “The companies plan to shift into full-scale implementation of the services they have been developing across Southeast Asia.”
But it noted that without disclosure of Grab’s financial position or Toyota’s stake, it’s difficult to gauge whether Toyota was paying a fair price for what was still a “strategically important investment.”