DETROIT/TOKYO -- Toyota Motor Corp.’s investment in Uber Technologies Inc. has drawn the battle lines between the world’s largest automakers, which have now solidified partnerships with competing ride-hailing apps in the burgeoning field of on-demand transportation.
Along with buying a small stake in Uber, Toyota will begin offering leases to Uber drivers, who’ll be able to cover their payments with what they earn ferrying around the app’s users. The collaboration follows investments by Volkswagen AG and General Motors Co. in Uber rivals Gett Inc. and Lyft Inc., respectively.
Aligning with Uber, Lyft and Gett represent strategic moves by the world’s biggest automakers to have an inside look at an industry taking aim at the concept of car ownership. The hailing apps are luring outsiders with auto industry ambitions including Apple Inc., which invested $1 billion this month in Chinese car-booking giant Didi Chuxing.
“There is a huge market in ride-sharing,” said Steve Man, a Hong Kong-based analyst covering the auto industry at Bloomberg Intelligence. “This is changing the way we use cars and the automakers don’t want to miss out.”
Toyota and Uber, the largest global ride-hailing provider, declined to comment on the size of the investment.
The Japanese automaker has no interest in taking a big position in the ride-sharing company or eventually controlling it, said a person familiar with the situation who asked not to be named. Toyota could easily get out of the investment if the partners decide to go their separate ways, the person said. Toyota wants to build expertise about how consumers use ride-sharing services, the person said.
Gett, the taxi-ordering rival to Uber based in Tel Aviv, said on Tuesday it raised $300 million from Germany’s Volkswagen. In January, GM invested $500 million into Lyft, the second-largest U.S. ride-hailing service. GM President Dan Ammann joined Lyft’s board, and the automaker has begun leasing vehicles to Lyft drivers in Chicago, with the companies planning to expand the program.
In the nearer term, Toyota’s investment in Uber may help Toyota guard against GM’s ambitions to use its partnership with Lyft to bolster sales in urban areas. GM is reliant on SUV and truck sales in rural markets and saw an opportunity to boost its market share in cities, Lyft CEO Logan Green said last month at a tech conference in Tokyo.
“The automakers see a threat and an opportunity,” said Alan Baum, an independent auto analyst in suburban Detroit. “If all they’re doing is selling vehicles and don’t see the customer again for years, then that’s a problem. If they can find a way to generate ongoing income, then that’s what they want to do.”
Among its global competitors, Uber has a strong position in congested urban centers where ride-sharing is taking root first, Baum said. Toyota and other automakers want to jump on the ride-sharing bandwagon partly because investors are pushing them to do so, he said.
Uber has raised more than $10 billion in capital since it was founded in 2009. The company has been seeking strategic investors, people familiar with the matter said last year.
With Toyota, Uber will augment its existing leasing programs, which also include Enterprise Holdings Inc. Short-term leasing programs, such as those offered by Uber and Lyft, have recently attracted the attention of regulators in California, which are considering banning the practice. Toyota and Uber hope to begin providing the new leasing options by the second half of this year, said Keisuke Kirimoto, a Toyota spokesman.
“We realize that this collaboration has potential, but we want to start it out as a pilot project,” Kirimoto said. “We want to explore and then see what will be possible.”