Grab, the ride-sharing platform that recently acquired Uber’s Southeast Asia business, grabbed an impressive $1Bn investment from world’s largest car manufacturer – Toyota. Upon completion of the current funding round, Grab will reach an eye-catching $10Bn valuation, while uniting investors like Hynndai, SoftBank and Didi Chuxing.
The manoeuvre of the Japanese giant is far from isolated. In a similar, yet considerably smaller transaction Volkswagen invested $80M in Gett a couple of weeks ago. In fact, pretty much all automotive producers are either developing in-house car-sharing/robo-taxi programmes or partnering with each other on one.
Putting environmental benefits and business’ scalability aside, industry’s enthusiasm for ride-sharing is quite practical. Having a centralized fleet operator should materially detriment manufacturers’ bargaining power, disrupting industry’s profitability and distribution channels. Moreover, once a clear leader is established, the entry barrier will become noticeably higher as users are unlikely to have multiple identical applications installed on their devices.
SORTIS view: We believe the competition between car manufacturers and technology companies to position themselves as the most recognized ride-sharing platform will intensify, lifting valuations to astronomical levels. These capital inflows will catalyse incumbents’ penetration, which in turn will transform numerous industries – from insurance, to automotive parts and maintenance, to retail and food deliveries.
