The Honda Motor Co (TYO:7267) of Japan, a leading automaker in the world, revealed on Monday that the business is investing in the Asian ride-hailing service Grab. This would be a part of the $750 million funding that the company has already announced for collaborating on motorbike-hailing services.
The exact amount of the investment in Grab has, however, not been disclosed.
Ride-sharing businesses are growing exponentially all over the world, ever since Uber introduced their services a few years back. Volkswagen (ETR:VOW3), General Motors, and Toyota, also of Japan, already have deals in place with ride-sharing businesses. This time it is the turn of Honda. There is a definite shift towards ride-sharing, though automobile sales are not necessarily coming down yet.
Grab Leading in Southeast Asia
Grab is a big service in Southeast Asia. The company operates GrabTaxi, GrabCar, and GrabHitch in Singapore, Thailand, Malaysia, Indonesia, Philippines, and Vietnam. Their app has been downloaded more than 19 million times on mobile devices. The network, as of July 2016, has more than 350,000 registered drivers. South and Southeast Asia has emerged as the new ride-sharing battlefield with Grab taking on Uber.
Last September, the business was valued at more than $3 billion.
Grab May Sell Honda Motorcycles Too
In a statement, Grab President Ming Maa said Honda has agreed to make the investment, and the money will be used to further develop their ride-sharing technology, and also on driver education programs. But the partnership might go beyond that as well. “We are in the planning stages on exactly what a full partnership will look like, and there are many different prongs of that. One prong would obviously include selling Honda motorbikes within the region”, Maa added while speaking to reporters.
Honda (TYO:7267) is presently the world’s largest motorcycle maker. It would certainly help Grab if they get to sell them as well, apart from running the ride-sharing services.
Ming Maa has been working in Grab since October. Before that, he was with the SoftBank Group Corp of Japan, which incidentally has already invested in the ride-hailing service.
Grab wants to stay ahead of Uber by staying local. “Transportation is a very local problem. Jakarta is different to New York or San Francisco”, Maa says. The company accepts cash payments as many consumers in the region still don’t use cards or has bank accounts. Realizing the market realities, Uber too has introduced cash payments in cities like Jakarta.