Honda Motor Co Ltd (NYSE:HMC) is the latest investor in the Southeast Asian ride-hailing service Grab, as part of a $750 million funding round. The automaker joins another Japanese company, Softbank, which has also invested in the Uber rival that is currently valued at $3 billion. However, it is still unclear the amount of money that Honda has invested in the ride-sharing service.
Ride Sharing Growing Investments
Honda’s investment in Grab adds to a series of deals by other automakers led by Toyota Motor Corp (NYSE:TM) and General Motors Company (NYSE:GM), which are also looking for opportunities in the ride-sharing business. The investment should go a long way in cementing Grab prospects especially in the South East Asia, where Uber is also eyeing market share.
The ride-sharing market in the region is poised to grow to highs of $5.6 billion by 2025 from $800 million as of last year. A partnership with Grab should allow Honda to have some stake in the motorcycle hailing services, especially in Indonesia. In addition, the Japanese company plans to focus on areas of telematics and safety equipment with its investment in the ride-sharing service.
“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,” said Grab president Ming Maa.
Uber Vs Grab
The deal with Honda adds to a similar deal that the ride sharing service signed with Tokyo Century as former Softbank executive, Maa, continues to bolster the company’s prospects in the fast growing business.
The wave of investment in Grab could spell more trouble for Uber, which is also competing for market share. While the giant ride sharing service boasts of an assailable lead on market share in southeast Asia, it might have to rethink its strategy as Grab’s bolstered financial power comes into play.
Given that Honda is the world’s largest motorcycle manufacturer it should be able to bolster GrabBike, Grab’s motorcycle hailing service. The service is currently available in 34 cities across six countries in Southeast Asia.
Honda was up by $0.31 in Friday trading session closing the week at highs of $30.63 a share.
