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Who’s The Mentor? What Grab and Toyota Can Learn From Each Other

You know it’s serious when an 81-year old auto giant is betting on a future that makes its traditional business less necessary

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BY Marishka M. Cabrera and Pauline Mendoza - 14 Jun 2018

Who’s The Mentor? What Grab and Toyota Can Learn From Each Other

PHOTO CREDIT: Getty Images

You know it’s serious when an 81-year old auto giant is betting on a future that makes its traditional business of car ownership less necessary.

Toyota Motor Corp. will invest $1 billion in Southeast Asia’s Grab, as the Japanese automaker explores new mobility strategies beyond manufacturing.

The investment — the biggest by a carmaker in a ride-hailing company — will bring up Grab’s valuation to just over $10 billion after the investment, according to Reuters. An executive from Toyota will then be appointed to Grab’s board of directors, while a Toyota team member will be seconded to Grab as an executive officer.

This isn’t Toyota’s first investment in Grab. In 2017, Toyota’s trading arm invested an undisclosed sum in Grab — the first investment from the company’s Next Technology Fund. The two companies have worked together since then to develop connected services.

The fresh investment will bolster Grab’s efforts to dominate ride-hailing and other services in the region, eating up rivals like Uber in local markets.

Now, what can a young, disruptive company teach the world’s most valuable carmaker and vice versa?

“In the cross-industry collaboration on those disruptive technologies, automakers bring two advantages: knowledge of how to build a car and the factories to do it,” notes an article in Bloomberg. “What they lack is the legions of software engineers at the disposal of tech companies in Silicon Valley and Shanghai,” and that’s where Grab comes in, with its expertise in innovating mobility solutions.

“This investment isn’t necessarily about making money but about getting access to technology that fits in some place in Toyota’s broader business,” says Edwin Merner, Tokyo-based president of Atlantis Investment Research Corp. that invests in Toyota Tsusho, Toyota Group’s trading arm. “If Toyota can build up knowledge on things like automated navigation, this is worth it. It’s a kind of R&D.”

This deal reaffirms one timeless lesson in the world of business: adapt to survive.

Businesses evolve and disruption is inevitable. For traditional car companies, ride-hailing services that put individual car ownership far from being needed is a painful reality that the disruptive future of mobility has to offer.

Grab just crossed a milestone of 1 billion rides across Southeast Asia last October 2017. “By building a technology platform that serves the most important everyday lifestyle needs of our consumers, we are benefitting an entire ecosystem of connected users who are not only passengers and driver partners, but also increasingly merchants and delivery partners,” says Sean Goh, country head of Grab Malaysia.

Grab’s vision is to provide a platform where people’s first and last mile needs are served. This is a kind of future that the ride-sharing economy drives for. And Toyota is certainly not late for this kind of future — where ride-sharing will always be here to stay.

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