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Business

Toyota partners with Uber to keep up with changing market

The Uber app allows users to hail drivers, who arrive at the designated location.

NAGOYA -- Toyota Motor made a splash Wednesday by announcing a partnership with Uber Technologies, the U.S. operator of the world's most ubiquitous ride-hailing app. However, whether auto companies can benefit from the rapid changes to their industry remains to be seen.

Formed in 2009, Uber now has a presence in 451 cities across 70 countries and jurisdictions. Although the company has received pushback from taxi companies and government authorities, especially in Europe, the number of Uber drivers is estimated to reach into the hundreds of thousands.

Toyota's investment is seen amounting to a few billion yen, and the carmaker is looking to provide its vehicles on lease to drivers in America. There is also speculation that Uber might team up with Toyota on driverless technology.

General Motors and other non-Japanese automakers have been quicker to hop on the ride-hailing bandwagon. Germany's Volkswagen announced Tuesday plans to invest $300 million in Gett, the Israeli provider of the on-demand mobility app of the same name. With the ride-hailing segment attracting the attention of Apple and the like, major information technology firms are joining global automakers in the race for a slice of the market.

Google positions vehicles as a venue for internet advertising. Apple is aiming to expand its content as it makes up for struggling sales of smartphones and other devices. Though IT companies can find success in turning vehicles into new earnings sources, the changing landscape may not necessarily be a boon for automakers.

Take car sharing, a trend getting as much attention as ride sharing. Smartphones have made it easier for individuals to strike up such agreements. If driverless technology advances car sharing even further, new-car sales may fall as a result.

The millennial generation, born between the 1980s and the early 2000s, is said to be shifting toward utilization as opposed to ownership. Companies traditionally reliant on manufacturing will find their revenue bases disrupted if that tendency intensifies. Last year, Barclays predicted that U.S. auto sales may decline 40% in 2040 compared with 2015.

Signaling the rise of cross-industry tie-ups, auto-related exhibits were prominent at the Consumer Electronics Show that took place in the U.S. earlier this year. Ford Motor CEO Mark Fields sees the turmoil accompanying the digitalization as an opportunity. Global automakers face the challenge of moving beyond their focus on manufacturing prowess to generate a new kind of value.

(Nikkei)

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