JAKARTA -- Indonesian group Astra International, the country's leading automobile distributor, will form a joint venture with Go-Jek that provides cars to the ride-hailing operator's drivers.
The tie-up will help Go-Jek expand its four-wheel fleet as it battles for dominance in Southeast Asia's largest ride market.
The deal includes an additional $100 million investment by Astra into the Indonesian unicorn -- private companies with valuations of over $1 billion -- lifting the conglomerate's total funding of Go-Jek to $250 million.
The venture adds "several thousand cars" to Go-Jek's four-wheel ride-hailing service Go-Car, all equipped with Astra's fleet management system, the two companies said. Drivers who use these vehicles will pay a subscription fee that includes services such as maintenance and insurance.
Go-Jek began as a local startup offering motorbike rides, which can weave through the Indonesian capital's chronic traffic.
The joint venture and Astra's new funding "demonstrate our continued confidence in Go-Jek" and represent "a tangible manifestation of our collaboration to explore the synergies between Go-Jek's technology and Astra's automotive business," said Prijono Sugiarto, president director of the conglomerate. "We hope this collaboration can help more people generate income, as this will improve their welfare and have a positive impact on Indonesia's economic growth."
Astra also operates businesses in mining, plantation farming and the financial sector.
An Indonesian regulation taking effect in June essentially bars individuals from acting as a car-hailing provider on their own. It will require any provider of four-wheel ride-hailing service to be either a state-owned enterprise, a company owned by a regional government, a limited liability company or micro and small business actors.
Go-Jek began with a ride-hailing app for motorbikes, expanding into an on-demand services platform for consumers ranging from food delivery to calling house cleaners. The unicorn started expanding into other Southeast Asian countries last year, going head to head with Singaporean rival Grab but remaining vigilant in its home market of Indonesia, which by far offers the largest potential.
Online transportation and food delivery are expected to be a $14 billion market in the archipelago by 2025, more than triple the size of closest regional rivals Singapore and Thailand, according to a report from Google and investment company Temasek, both of which are Go-Jek investors.
The deal helps Astra consolidate its lead in Indonesia's auto market, where it already holds more than 50% of sales. Just over 50% of Astra's shares are owned by the automotive subsidiary of Asian conglomerate Jardine Matheson Holdings, which also controls Indonesia's biggest supermarket chain and Mandarin Oriental Hotel Group.