Betting like SoftBank drives Toyota’s value up by $19 billion
Everywhere you turn in the transportation industry these days, Toyota Motor Corp. seems to already be there.
From batteries and self-driving vehicles to lunar rovers and ride-hailing companies, the world’s second-biggest automaker is on an investment spree, pouring more than $3 billion into deals and partnerships in recent years. Toyota is placing bets across the board, mimicking technology investors like SoftBank Group Corp.
Toyota, Volkswagen AG and other carmakers face an uncertain future as new technologies and business models ripple through the $2.23 trillion global auto industry. Uber Technologies Inc. has made younger buyers less interested in owning and driving cars, and Tesla Inc.’s success with electric vehicles has spurred bigger rivals to counter with their own products. All told, car sales will be only slightly higher in 2030, while new spending on mobility services will total $1.34 trillion, Accenture predicts.
“They are developing by far the most diverse lineup of different mobility products, from personal mobility to luxury cars and various types of shared mobility and commercial vehicles,” said Janet Lewis, an analyst at Macquarie Capital Securities (Japan) Ltd. in Tokyo. “Investors, to the extent that they are invested in the auto sector, generally agree that Toyota is looking like a winner.”
Indeed, shareholders are endorsing Toyota’s approach. The automaker’s stock rose 1% on Thursday, leaving it up 10% this year and adding $18.6 billion in market value. That’s better than the Topix index and other Japanese automakers, even amid tepid profit and sales growth. Analysts surveyed by Bloomberg predict quarterly operating profit will rise 1.3% to 692 billion yen, while revenue will climb 1.6% to 7.48 trillion yen.
In addition to investments and partnerships, Toyota’s spends about 1.05 trillion yen ($9.7 billion) a year on research and development.
Akio Toyoda, chief executive officer and grandson of the automaker’s founder, has been holding forth at public appearances about Toyota’s transformation into a mobility service provider from a manufacturer.
“My true mission is to completely redesign Toyota into a mobility company,” Toyoda said in May, saying the mission is to not just make products that move people around but provide “all kinds of services related to mobility.”
Toyota’s strategy is to tie up with the strongest ride-hailing providers in each region and then integrate its hardware and software into their services. Toyota is a major investor in the world’s three top ride-hailing companies: Uber, China’s Didi Chuxing and Southeast Asia’s Grab Holdings Inc.
In Japan, the carmaker teamed up with SoftBank which has poured even more money into the three companies in yet another mobility service venture called Monet Technologies Inc.
The Japanese companies are betting that Monet can evolve into a variety of transportation-related business. For example, they envision meal-delivery vehicles that can prepare food en route to customers, or hospital shuttles that offer medical examinations.
Toyota’s rivals aren’t standing still, either. General Motors Co. injected $500 million into Uber rival Lyft Inc. in 2016 while also pursuing its own robotaxi program with the Cruise Automation unit. Daimler AG and BMW AG merged their car-sharing operations this year after buying up several local ride-hailing ventures.
While Toyota was first out of the gate with the Prius hybrid car, it hasn’t rolled out any mass-market EVs. Like Volkswagen and other major automakers, the Japanese company was biding its time. That will change next year, when Toyota introduces the first of six EV models planned through 2025.