Toyota bets on future of taxis with ride-hailing app investment

Japanese automaker Toyota has agreed to invest in a local ride-hailing firm, which consolidates its position in the cab service industry, given that it already backs Uber.

3 min readFeb 8, 2018 03:37 PM IST First published on: Feb 8, 2018 at 03:37 PM IST

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Asia’s biggest automaker is investing an additional 7.5 billion yen ($68.6 million) into Japan Taxi, a cab-hailing app run by Ichiro Kawanabe, a taxi industry insider. (Image Source: Bloomberg)

Toyota Motor Corp is doubling down on taxis. Seeking a bigger role in defining the future of connected mobility, Asia’s biggest automaker is investing an additional 7.5 billion yen ($68.6 million) into Japan Taxi, a cab-hailing app run by Ichiro Kawanabe, a taxi industry insider. They will collaborate on data collection and connected taxi terminals, the companies said in a statement Thursday.

Akio Toyoda, Toyota’s president, has big ambitions for the automaker and its role in the future of transport. He has said that cloud computing and data will disrupt and present opportunities for new revenue amid a once-in-a-century shift toward connected, autonomous and electrified vehicles. Toyoda is aiming to redefine the 80-year-old car manufacturer as a mobility services provider.

“The question is what does Toyota think about ride-sharing,” said Seiji Sugiura, an analyst at Tokai Tokyo Research Center in Tokyo. “Now that Toyota has invested in Japan Taxi, the issue to look at is Uber’s expansion and strategy in Japan.”

This is what’s intriguing: Toyota is also an Uber backer. The carmaker made a strategic investment in Uber for an undisclosed amount in 2016 as part of a collaboration into ride-sharing technology. Toyota’s previous investment in Japan Taxi was made last year, for 500 million yen through its Mirai Creation Fund, which is also backed by asset management firm Sparx Group Co and Sumitomo Mitsui Banking Corp.

Uber hasn’t made much headway in Japan, accounting for less than 1 percent of monthly rides in Tokyo. Even so, the ride-hailing giant says it will expand in Japan, Singapore and other parts of Asia, according to Brooks Entwistle, head of the ride-hailing company’s business in the region. At the same time, Kawanabe, known as the ‘Taxi Prince,’ wants to make sure that Uber doesn’t encroach on Japan’s 1.72 trillion yen taxi industry. Apart from running Japan Taxi, Kawanabe is the chief of Japan’s taxi federation and heads Nihon Kotsu Co, Tokyo’s biggest taxi company.

Toyota started testing data-collection devices installed in 500 Tokyo-area taxis on a trial basis last year. Collecting driving data and video in real-time will let it construct dynamic maps that could speed the adoption of automated driving, among other things. Toyota aims to have autonomous vehicles ready for highway conditions by 2020, and on city streets within the following five years.

Japan Taxi’s app has been downloaded about 4 million time since its launch in 2011, and is registered with some 60,000 taxis, equivalent to approximately one in every four operating nationwide, according to Thursday’s statement. Toyota is also working with Nihon Kotsu to speed up the adoption of “JPN Taxi,” a new taxi model by the automaker that resembles London’s black cabs. “Toyota is involved with Uber, and is it going to also protect the taxi industry?” Sugiura said. “It seems that they’re looking at both.”