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Toyota’s billion-dollar bet on Grab will lower fares

Leow Ju-Len
18/12/2018


Cheaper Grab rides are on the horizon, but Toyota’s investment in Grab could have further-reaching consequences
SINGAPORE — Cost savings from Toyota’s partnership with Grab will lead to lower fares, the ride-hailing company’s head of regional operations said today.
Both companies jointly announced that Toyota will offer its Total-care Service to Grab. The arrangement will see Toyota distributor Borneo Motors service a Grab car in 30 minutes or less.
Toyota set up and funded a dedicated “Intensive Care Stall” at Borneo Motors’ Pandan Crescent building for Grab cars. With special tools, autonomous carts and a maintenance programme guided by tablet computers, technicians there can work on a car so efficiently that it takes up just 15 minutes of actual workshop time.
Borneo Motors’ managing director Jasmmine Wong told CarBuyer the company will now study how to roll out a similar quick-servicing programme for other Toyota drivers.

Toyota Motor Asia-Pacific president Susumu Matsuda said the Total-care Service is the first of its kind in the world.
It uses an in-car data recording system that Toyota calls TransLog. Toyota will begin installing them next year in 1,500 Toyota Priuses that belong to Grab subsidiary, GrabRental. Grab said it intends to have Toyota’s TransLog recorders in all its Toyota cars. By 2020, both companies want to see Grab’s Toyota fleet grow by 25 percent but did not share the current number of Toyotas owned by Grab*.
Grab’s Mr Cohen (pictured top, left) said the Total-care System could make car insurance cheaper for safer drivers and facilitate predictive maintenance, which involves calling cars into workshops to keep minor problems from turning into costly breakdowns.

“The intention is always to lower our operating cost, and to lower the cost for our driver partners in operating the Grab platform,” Mr Cohen said. “We have expectations for our own financial outcomes with each ride or each transaction, so if we can lower our operating cost that will flow through to cheaper fares for our passengers as well.”
Toyota said it is pursuing another goal: safety. Mr Matsudu said that TransLog data can be used to advise drivers on safer behaviours, and that insurers can provide an extra nudge in that direction.
“Aioi Nissay Dowa Insurance is already offering driving data based automotive insurance in Singapore,” Mr Matsuda said. “Under this policy, based on driving data collected by Toyota’s TransLog, driving behaviour can influence the cost of insurance.”

In the long run, the data collected will allow Toyota to monitor how its cars are used, in turn providing clues about how to prepare its future cars for a world of robo-taxis.
“Toyota is enhancing its efforts in the mobility service area as we aim to transform ourselves from a car company to a mobility company,” Mr Matsuda (pictured above) said.
With Grab, the car company has more than cars to keep an eye on. In June it agreed to invest heavily in the ride-hailing company, committing US$1 billion (S$1.37 billion) in capital. The deal reportedly valued Grab at more than US$10 billion, and gave Toyota a seat on Grab’s board.
Grab says its app has been downloaded onto more than 100 million mobile devices across Southeast Asia. It operates in eight countries, potentially giving Toyota access to a treasure trove of data about how cars are used in a mobility-as-a-service (MAAS) scenario.
Carmakers have rushed to tie-up with Grab since the latter swallowed Uber’s Southeast Asia operations. Hyundai injected US$250 million in November in a deal that would see Grab purchase electric vehicles from the Korean carmaker.
This month, Yamaha Motor said it would invest US$150 million in a collaboration with Grab for motorcycle ride services.
Toyota’s investment in Grab is the biggest such deal between any carmaker and a ride-hailing business, but the Japanese giant also has investments in Amazon, Uber and China’s Didi Chuxing.
Carmakers have teamed up with ride-hailing services around the globe as they anticipate an era in which private car ownership increasingly gives way to MAAS.
For that to happen, three key pieces are seen as crucial: electric drive (which is less costly to operate than petrol or diesel), autonomous or self-driving cars, and a way to summon those cars.
Given that Toyota is investing billions to develop products in two of those areas, what’s another billion in Grab?

*an earlier version of this article incorrectly stated that 25 percent of the cars in Grab’s fleet would be Toyotas by 2020. Sorry for the error.

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