GRAB Holdings Inc. seems pretty pleased with itself at nabbing a $1 billion investment from Toyota Motor Corp.The idea isn’t new – Toyota pumped in a small amount last year – but this is the biggest financing by a car company of a ride-hailing service.Grab ought to be wary of such largess in a deal that looks a bit like vendor financing. That would be a mistake.What’s made brands like Grab, Uber, Didi and Lyft so compelling is the fact that they’re not buying, running and maintaining fleets of vehicles in the way that Hertz Global Holdings Inc. and Avis Budget Group Inc. do.Grab talks about providing drivers with “increased opportunities for them to move up the economic ladder.”That’s a noble sentiment. But even if Grab stops short of owning vehicles itself and merely facilitates loans to buy new cars, the company then bears the responsibility of ensuring drivers get enough work to pay off those debts.The whole point of the ride-sharing business was to match excess supply with excess demand.Artificially adding vehicle supply throws out the economic equation, pushing up competition among drivers and keeping prices low. We’ve already seen examples of this in both developed and emerging markets.In taking cash from Toyota, Grab should be careful it’s not driving down a dead-end street. - Bloomberg

Source: The Star June 13, 2018 05:36 UTC